Hey GE, while you were busy with subprime lending and buying media properties like NBC, a once-small Korean company took over your core business. They make pretty good products, too.I used to think Jack Welch was a genius, but that was a long time ago. It turns out that Welch wasn't a genius, he was just riding the stock market bubble.
Update: Just to comment on what Paul said. Not to criticize, but to expand the conversation a bit.
Everyone in the world knows how to bend metal, paint it, throw in a electric motor and some parts.Yes and no. If LG was building nothing but top-loading washers that have been around for decades, yes. But there is still innovation going on, even with household appliances.
There is no way he was going to expend expensive front office staff into a no profit, crowded environment.Perhaps the field is crowded, but it's still profitable. Otherwise a company like LG wouldn't have come from seemingly nowhere to dominate retail space.
From a June 1998 BusinessWeek article,
The company boasts what most headhunters believe to be the most talent-rich management bench in the world. Gary C. Wendt has led GE Capital Corp. to extraordinary heights, where it contributes nearly 40% of the company's total earnings.That was the secret to Welch's success, and look at GE now.
8 comments:
Neutron Jack was also undercapitalizing GE's insurance business. Take away the underfunding, and you have zero growth under Jack's reign. He was a six sigma fail.
Samsung is doing a pretty good job too. We are buying a Samsung washing machine today to replace the 15 year old Kenmore we currently use. We already own a Samsung TV that's top notch.
A lot of truth. Lucky and ruthless.
He turned GE around. In as much as he could, he made sure GE was No 1 or 2 in any business they were in.
Think of all the other companies that existed when Welsh took control, and don't exist now. He commanded and weathered in the stormy environment with what he had quite well. There would of been a good chance that with out Welsh, GE would of been gone.
He's very plain spoken, rubber meets the road.
Appliances are a commodity business. Everyone in the world knows how to bend metal, paint it, throw in a electric motor and some parts.
There is no way he was going to expend expensive front office staff into a no profit, crowded environment.
It would be like a general worrying about the fate of a platoon somewhere. Or a emergency room physician spending two hours with a patient with terminal cancer.
You only have so much talent, so much time and you owe a lot of money, have debts to people that want their payments. You know, like pension plans. And of course the government wants it's tax money too.
I know the contractor that got the job for Welsh's Fairfield house. Later he asked why he got the job, as opposed to the others, who were good companies too. Welsh said that he was the only one that questioned the architect hard about various things in the plans. The others just passively accepted the plans.
Anyways, American engineering schools are all foreign students. We don't want to make things. Cities used to be full of mechanics halls, associations, dinners. Not anymore. Democrats hate manufacturing, but like the union power elite. Yuppies, environmentalist, lawyers, artists all heavily anti manufacturing, although they love their Ipods, Volvos, carbon fiber snow boards.
The only way we can have manufacturing is to put the industry on farm subside type welfare programs. We don't have a tax/regulatory/culture that is manufacturing friendly anymore. And we don't have the money to do it. We are borrowing now to pay the interest on the finance charges of previous borrowing. We already have massive tax 'avoidance'.
Sorry, but I left, read something, and am back.
You want also to know why high cost low profit manufacturing is leaving?
Burden, not just from competition( good burden ) but the ever metastasizing economic cell killing taxes and government.
Under Gov. Rod Blagojevich, Illinois borrowed $10 billion for pensions in 2003, with some of the borrowings to be invested in the stock market to beat the 5 percent cost of interest.
In January, while everyone was busy watching the nasty campaign commercials, the State of Illinois pulled an end-run on the budget process. On Jan. 7 the state sold $3.5 billion of "pension obligation notes." In simple English, the state borrowed money to finance the state's contribution to its five retirement systems.
But what happens in five years when those bonds must be repaid? Where will the state find $3.4 billion -- plus the interest. On that day, the war between the taxpayers and the public pensions will officially begin. "
The Tea Party is just a warm up call. The financial feces of the last fifty years has yet to hit the fan.
Newflash for the uninformed:
Appliances aren't even close to being GE's core business. Never have been.
LG makes very nice, high-end appliances.
If you want a new front-load washer you buy LG, not GE.
GE's appliances are cr*p and have been for awhile.
GE's claim to fame has been financial services, which are about to be re-regulated to 1930s extremes.
GE's profits (and stock price) will be very low for a very long time.
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