GE Corporate News

"New York Times"(*)
https://www.nytimes.com/2017/06/12/busi ... v=top-news" onclick="window.open(this.href);return false;
reports that Immelt is stepping down has GE's CEO, to be replaced by someone named Flannery, whose prior experience seems to have been largely on the financial side. (Simonelli, who at one time headed GETS, is named as one of the candidates passed over.)

There is no mention of the locomotive business in the article, but a bar graph suggests that "Transportation" yields something like 2 and a half percent of GE's revenues.

(*) I have a subscription, but I think non-subscribers are allowed to read some small number of articles monthly on the NYT's web site.

Here is coverage from The Journal (may or may not be able to access - Google AMP sometimes can crack a paywall):

https://www.google.com/amp/www.wsj.com/ ... 1497276816" onclick="window.open(this.href);return false;

Fair Use:

...Jeff Immelt became chairman and CEO of General Electric Co., one of the world’s largest corporate conglomerates, in 2001. On Monday, the company said he would retire as CEO in August.

Here is a rundown of some of his accomplishments and the changes that occurred at GE under his leadership:

Sept. 7, 2001: Mr. Immelt becomes GE’s chairman and CEO.

Like Mr. Hazen, I too wonder the life expectancy of the transportation product lines. The 2016 "coloring book", aka Annual Report, concurs with The Times reportage.

Now that they have shed Consumer Products, and Entertainment, looks like the only way John Q will have contact with the company is to "take a ride on the MRI Express".

I somehow think locomotives are not long for this world under the GE banner. The interesting question; if not GE then who?

Let the speculation begin.

disclaimer: author holds long position GE

Here's a Forbes column regarding GE and Jeff:

https://www.forbes.com/sites/adamhartun ... cb68444ad2" onclick="window.open(this.href);return false;

Fair Use:

.Welch's focus on growth led to a bigger, more successful GE. Adjusted for splits, GE stock rose from $1.30 per share to $46.75 per share during the 20 year Welch leadership. That is an improvement of 35 times - or 3,500%. And it wasn't just due to a great overall stock market. Yes, the DJIA grew from 973 to 10,887 — or about 10.1 times. But GE outperformed the DJIA by 3.5 times (350%). Not everything went right in the Welch era, but growth hid all sins — and investors did very, very, very well.

Under Welch, GE was in the rapids of growth. Welch understood that good operating performance was not enough. GE had to grow. Investors needed to see a path to higher revenues in order to believe in long term value creation. Immediate profits were necessary but insufficient to create value, because they could be dissipated quickly by new competitors. So Welch kept the headquarters team busy evaluating opportunities, including making some 600 acquisitions. They invested in things that would grow, whether part of historical GE, or not.

Jeff Immelt as CEO took a decidedly different approach to leadership. During his 16 year leadership GE has become a significantly smaller company. He sold off the plastics, appliances and media businesses — once good growth providers — in the name of "refocusing the company." Plans currently exist to sell off the electrical distribution/grid business (Industrial Solutions) and water businesses, eliminating another $5 billion in annual revenue. He has dismantled the entire financial services and real estate businesses that created tremendous GE value, because he could not figure out how to operate in a more regulated environment. And cost cutting continues. In the GE Transportation business, which is supposed to remain, plans have been announced to double down on cost cutting, eliminating another 2,900 jobs.
..

I'm of thought that if Light Bulbs, invented by Thomas Alva Edison who founded GE, are "goners", how much chance have railroad locomotives?

disclaimer: Long GE; I bought when it was "the house that Jack built" and it was exciting to watch how GE was going to help me retire (age 62) while I was young enough to enjoy it . Then came 9/11, Great Recession, and Jeff. Things ceased to be fun . Let's see what a "career man" can do.

Or so reports Gray Lady:

http://nytimes.com/2017/06/13/business/ ... nnery.html" onclick="window.open(this.href);return false;

Fair Use:

...Transportation — mainly locomotives — is another heavy-equipment business with solid service revenue. It is not a big business for G.E., but it is a solid one

No mention of locomotives, but insightful Opinion appearing yesterday in The Times:

https://mobile.nytimes.com/2017/06/15/b ... mmelt.html" onclick="window.open(this.href);return false;

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...Jack Welch..... most influential manager of his generation.”

Mr. Welch himself was more circumspect. “My success will be determined by how well my successor grows it in the next 20 years,” he said at a management conference that year.....“Given how horrendous the stock performance has been for so many years, the most amazing thing is why the board didn’t act sooner” to replace Mr. Immelt, said Charles M. Elson, a professor and director of the John L. Weinberg Center for Corporate Governance at the University of Delaware

Any stakeholder, even if simply a railfan wondering if they will stay in the locomotive business, will find this interesting - and a discredit of "The House That Jack Built" business plan.

disclaimer: author is Long GE

Quote from the New York Times

Jet engines and power turbines reflect the most lucrative business model for G.E.: an equipment sale that ensures years of revenue from services. The services revenue over the lifetime of a G.E. jet engine, which can be 30 years or more, is eight times the value of the initial engine sale, analysts estimate. That stream of revenue carries high profit margins.

It seems to me that this statement would also apply to locomotives.

Merrick1--
Definitely! And note that GE has pursued parallel ideas to develop the jet engine and locomotive businesses: sensors on the "engine" (either sense of the word) that automatically report back to GE which can then recommend maintenance actions "in real time." There has been a lot of publicity lately about GE's efforts in this direction in the jet engine business; those of us who follow the locomotive business have been familiar with the idea for several years!

So maybe there is some hope that GE will stay in the locomotive business (even under a CEO with no past association with Erie): it is like its other "core" heavy engineering businesses in many respects, and seems to allow application of similar strategies to involve GE more closely in the operation and maintenance of "units" (of whatever kind) they have sold.