The Fall of General Electric
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- Опубликовано: 27 июл 2024
- GE, the legendary bellwether American company, was founded by Thomas Edison in 1889. It was an original Dow Jones Industrial Average component, which represents the 30 largest stocks in the U.S. GE stayed on the Dow Jones from the early 1900’s until 2018 when it was abruptly removed.
GE was always a large company, but Jack Welch who took over in 1981 brought General Electric into the stratosphere; he led GE from being the 9th largest company to the largest by the year 2000.
Jeff Immelt took over in 2001-and had big shoes to fill. Early on, Immelt was a competent CEO, but over time he made a number of mistakes that cumulated to ruin GE’s once mythic image when it needed a bailout of sorts (from Buffett and sort of by the FDIC) during the financial crisis of 2008.
After the financial crisis, with GE’s mythic image in a state of disrepair, Immelt tried to rebuild the company and made 4 key mistakes:
1) He sold NBC at a discounted price.
2) He heavily invested in oil companies
3) He sold the profitable GE Capital business at a large loss
4) He purchased Alstom a French Power company.
Each of these decisions led to turmoil. In 2015, Immelt said GE would earn $2 in 2018. However, in 2018, GE lost money. In 2017, Immelt left the company, but GE’s new CEO John Flannery would last only a year-he was fired in 2018. Lawrence Culp, the former CEO of Danaher, took over in late 2018. He forecasted GE’s EPS to be less than 70 cents in 2019. Oh, how the might have fallen!
GE is the tale of a CEO (Jeff Immelt) whose biggest mistake was listening to shareholders.
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Hey guys, I hope you enjoyed the in-depth video. It's meant to be more of a documentary to be enjoyed in one more more sittings. Please feel free to comment on a future videos that you would like to see.
Our latest video on The Rise of Shopify: ruclips.net/video/nEB8hvN47CI/видео.html
Starting from how the company started to how it became 2nd only to Amazon.
Also check out our video on Disney: ruclips.net/video/_wut8calH_o/видео.html
Starting from when Bob Iger took over the company and how that came to be.
What happened in late 2018 when the stock reached its lowest?
We talk about it in this old video: ruclips.net/video/TjLlMPklU3U/видео.html
Timeline: Oct Flannery fired and new CEO, Also around the same time they booked a $23 B charge mostly related to Alstom. The charge was actually quite weird given they only paid $10 B for Alstom. So essentially Alstom was bought with negative tangible assets. Also GE may have done it like this (as some speculate) to avoid having depreciation charges and hence higher earnings, but that is wild speculation.
For me the main thing (since you can never be 100% sure what the entire market is thinking) is GE cut its dividend to 1 cent at this time. So a lot of people are dividend investors. So when you change your group of shareholders, it doesn't change the value of the company but there can be a lot of volatility as the dividend investors exit and the value investors move in. So that is most likely what we saw there.
The Market is Open
There’s a lot of info in this video but I think you left out the sell of the appliance division to the Chinese company Haier.
The Market is Open Dude, you have establish the company you are discussing is GE. I’ve heard GE mentioned so many times in the video my head was about to explode. 🙄
Samuel Adler that’s your feedback?
Industry was built by men in denim dungarees and destroyed by men in silk suits!
I know them both, and I know who I would rather bet on!
I TOTALLY AGREE W YOU!.
I call them guys with Blue Suede Shoes...I took an ailing Gas station and turned it into a thriving business and got "Manager of the Month" I'm a HS Drop out and I realize this is not the caliber you speak of but it is the same concept.I had outsold a college educated company man who took over a transmission shop I managed. Some just cannot see the forest for the tree's quoting lovely Linda Ronstadt😊
@@packingten - ✌️Your Exactly the kind of person I mean. People who “come up through the tools” as we say in the U.K. are way better at the job because they learn the basics early on, and then build on learning.
There are very few jobs in my humble opinion that don’t benefit from this way of learning.
Going to University doesn’t automatically make you fit for work.
I’m glad you did well, proof positive 👍🏼✌️✊🏼🌅
GE invented 'value engineering' where you take a great product and cut costs until the product is no longer great. Replace metal parts with plastic, etc. In the 1990's I wanted a GE washing machine to replace the one I had for 15 years. The salesman told me I would not get a long life from a new GE washer since Jack Welch was running the company.
They fired the division GM for unable to control cost from corp headquarter.
As a business student, I was surrounded by lots of business case and books glorifying GE & Welch success. So it was all financial engineering, as a lot of people in the comments were dealing and pointed it out.
I was hire by GE Energy in the fall of 2008, as an industrial electrician going in and out of power plants, substations, etc. I applied for the job in Jan. 08, endured 6 interviews, with 7 managers across a 9 month means. Though this this video mentioned that Imelt was advised to get back to core, industrial business endeavors, I saw the facility I worked out of began to throw away tooling, shred files/blueprints, and layoff allied tradesmen that had decades of seniority on me.
. Not only did I have to dismantled the facility I was hired at, but I was sent to another GE subsidiary to close and mothball its equipment.
GE received a TARP bailout, and received billions in Feb. 2009 from Obama's Stimulus Package two boot. The latter bailout was for electrical grid infrastructure improvements, work I was hired to do.
The first week of March 09, was my last week at GE Energy.
I put more time in the job interviewing process, to get the job, than I did working there. Fuck GE.
Their "core business" has been earnings smoothing for years and your post confirms it. They don't produce anymore. Any "production" they have is probably insourced for overseas. In fact, I'm sure of it. Their turbines, etc. some were produced in plants in Singapore, etc. last I checked.
They're a producer in name only. GE is more like a financial services company and has been for decades. And they're obviously not very good at it, as Markopolis has exposed.
They are looking at share price only. That's their game.
When that stupid Jew lady says Markopolois is trying to manipulate the stock price, she's overlooking that this is exactly ALL that GE does with their accounting tricks. They are defrauding the market. He isn't manipulating the price. He's trying to correct it. Made me laugh out loud.
Someone else asked this same question. GE sold them to Comcast. I think GE still has some ownership (minority) in CNBC.
Thereis Hope If the boss is a conman, they suspect everyone else to be one, too. If no one can be taken at face value, then spread the responsibility for hiring this or that person to as many people as possible.
I was a GE Field Engineer in GETSCO International Department from 1978 to 1981. After getting fed up with working all over the planet for peanuts, I transferred to the GE Marine Department in San Francisco. Gee, How nice...do a good job and never be home for months on end. Be a jackoff incompetent loser engineer and they keep you home. So I quit in 1985 and formed my own company. I made 4 times what GE paid me and it laid the groundwork for me to retire early. I had good times on the jobs but feel that GE fucked me in the ass too many times. I have nothing good to say about how they treated us.
I wrote this 2 weeks ago. I approve of this message.
My company had once been a vendor to Lufkin Industries, beginning in 1974. The people who worked there were the finest customers a vendor could have. Shortly after GE took over operations, we lost our 40 yr business relationship over price cutting/maximizing profits. Not too long after that, GE shut down the oilfield gear manufacturing operations in Texas and shipped it overseas to China. GE simply came in and ripped the business out of the heart of east Texas where it has been for over 110 years. Many good people lost the only jobs they had ever had. Lufkin used to make what was known as "the Cadillac of the oilfield pumping units". I'm sure the Chinese version is not the same quality. My opinion of Immelt is not sterling.
Well, that's too bad. Sounds terrible, as somebody who has a ton of GE stock (sadly). But at least you have great scenery in that part of Texas (Marfa).
The name of the game in oil is reliability, not price. It costs a huge amount of money to drill holes in the ground. A downhole failure may be a day or two to fix. And depending on the drill site etc. etc it's on the order of $1 million a day. It couldn't be less than $100k Cheap China stuff does NOT help in this business.
@RakeRocter We can insist that our country is not harmed by unequal trade though.
@RakeRocter "Cheap stuff from China helps people too."
Robert Sawvel a company is not charity, it’s a business. It has no obligation towards employment considerations. Primary purpose of a business is to make money for its owners/shareholders.
I've had my GE shares for decades. Did not understand what happened afterJack Welsh. You have enlightened many of us. Thank you
you held a company for decades and had no idea why? youre a fucking idiot
@@alexrobinson7127 Says the person who has the username of the worst striker in English Football ever! He could have done with some GE Tech to stop him falling over every 5 minutes
@@JT_1 Hes held on to GE stock during a decline from $50 to less than $5. And he didn't even realize what was going on all this time?
He is a fucking idiot, and so are you for defending him. And He has lost god knows how much money.
My grandmother bought GE stock for my brother and I when we’re we’re toddlers and hoped that through the years it would continue to rise. Around the time it hit its highest, I was just getting out of elementary school. Middle class traders like my grandmother didn’t follow business news or trends. She just invested on faith and treated it like a bond. Lesson learned.
Little mention of GE's electrical products, once a leading brand but now has a bad reputation for cheap products. Eaton and Siemens now dominate this market.
GE Appliances are owned by a Chinese company that's why.
Now owned by ABB...expect big improvements
@@2001COUPE - "HAIER" is (or was) the name of it. But their electrical and appliance product units were divided (or reorganized) and sold to many different companies.
D Bailey another one shooting their mouths off about shit that is obviously way over your head, why bother?? just want to make yourself look stupid??
I’ve always had good luck with their lower end dishwashers over the years
Steve Jobs was famous for saying that he never cared for the share price of Apple and he only wanted to make the best products.
Besides, the shareholders are not the customers and if you want revenue you have to please the customers and only the customers with the best products.
Good presentation
Jobs did not become a billionaire from Apple stock. He became a billionaire from Disney stock after he sold his Apple stock to buy Pixar and then sold Pixar to Disney.
@@robertm3951 So what? If he had held his Apple stock ut would've still made him a billionaire anyway.
@@c.s1393 Jobs used money he got from selling the stock to build NeXT computers which became the foundation of the MacOS System 10 and iOS when Apple hired him back. Who knows if Apple would be worth anything if that did not happen.
@@robertm3951 Fair enough, I stand corrected.
As an AAPL holder, I worry whenever Apple talks up their ambitions of entering the car business. lol
I prefer companies staying in their core business, but I'm old school, so...
The CEO was too concerned about the value of his own stock option
package. 😣😣😣😣😣😣😣
Welch’s slash & burn management strategy hollowed out the company and left Immelt a shadow of GE’s former self. Welsh’s destructive methods were unsustainable.
GE's management was like bureaucracy. It moved away from it's founding father's central nerve, INNOVATION. Immelt ran GE like a swap meet.
Very interesting review. Thanks. As a former GE employee in finance, I was there from 1985 - 2001. I listened to my superiors and invested all of my 401K savings in GE stock. Thank heaven I got out when the stock was at $40 a share. I attended GE’s management programs at Crontonville. It was interesting but when Jack would arrive the environment would change drastically. In my opinion, he was a tyrant and someone I had little respect when it came to people management. Then on to another great company, FannieMae and was there until a year after the government take over. Both companies became toxic environments for employees who really wanted to do a good job and were loyal. Lost a bundle there in investments also. I did manage to save money and was able to recoup some of my losses through careful investments. All I can say is I learned a lot on what not to do from both companies. I did end up at a wonderful company and happily retired.
I was in Healthcare from 1987 to 2000 then 2005 to 2010. Bad divorce made it easy for them to want to get rid of me. Still, it aggravates me to think my pension from them might be in jeopardy because of their foolish management. Almost seems like GE was purposely mismanaged to maybe break the unions and get rid of the pensions.
The perfect example of GE is their home appliances. I recently purchased a home with GE dishwasher and range. Within a few months the rack on the dishwasher began to rust, and needed to be replaced. I went to the GE appliance parts website and found countless complaint comments about rusting. Every one had a response pasted to it that implied customers were loading the dishes improperly, not that they were making crap products. I understand that dishwashers are a small part of their business, but their response to the problem seems to show a lack of concern for the future.
GE Appliance is owned by Haier Electronics in Hong Kong. They bought GE Appliance for 5.6 billion USD in June 2016. So it's no surprise that the product quality went down, gotta cut them corners hard to make all that billions back. The times when a GE Dishwasher, Fridge and so on lasted a lifetime are long gone.
Well this was as interesting as it was comprehensive, I very much appreciate that quotation in personalized tone to better reflect the fact that it was a direct quote. Excellent work! Thank you!
Thanks Sventasis! Feel free to comment on future ideas. Right now, we are starting work on the rise and fall of Kraft Heinz. But we are open to most ideas.
That company was trash since 2003 . The washer machines they produced was such garbage that they would be broken before pulling out the shipping rods . I’ve delivered and replace 80 machines in a 50 mile radius
Awesome! I drove to the grocery store today.
@@513ghost5 what's your point?
Ironic, you mention that. Bought one of their washers to replace an old unit that was over 10 years old. Within 2 months the agitator (plastic) broke in half under normal use. I would never buy anything made by GE.
The likely just licensed their name only.
GE appliances is actually owned by a Chinese company and they made some deal to use the name 'GE appliances' for 50 years.
Does anyone remember Jack Welch's nickname? It was Neutron Jack. It was said if he visited a factory, that the building would be left standing, but the people would all be gone. Welch showed no loyalty to the history or legacy of the company, and none at all to it's employees. He literally wrote the book on current business models, where the CEO's receive obscene salaries, and the only thing that matters is the dividend paid to the shareholder. The company lost it's identity and went into businesses that were unrelated to the origins of the brand, or even to each other. GREED is what killed GE.
Employees know that employees that care and work hard are the company, but obviously Welch didn't care.
I remember...
Karen Willey only fools believe that company is supposed to be loyal to employees. It’s a business arrangement between employee and company. Where company pays employee for his work. As soon as the company doesn’t need employee’s skill, company has no reason to keep the employee. Same goes for employee, he should keep looking for a better opportunity and move as as soon as a better opportunity comes along.
worse than chainsaw al?
Karen Willey - The wealth is in the knowledge and skill of the workers!
Been falling for years till Welch saved it. How? Credit markets and cooking the books.
I always thought Jack Welch was a fraudster, every quarter, I mean every quarter he met or exceeded Wall Street analysis estimates !! How the hell was that possible ?
@@sevewonn8567 Yes indeed. And besides: never trust these "manager of the year" titles ;-)
@@sevewonn8567 I mean fraud. It wasn't exactly fraud. But everyone knew what time it was. Freshman year in business school my honors cost accounting professor laid out several methods in which it was obvious that Welch was cooking the books and smoothing earnings.
For example the guy in this video cites P/E ratio expansion under Welch, that shit is a joke. A huge portion of GE's earnings had nothing to do with cash flow, they're just produced by adjusting the amount of insurance reserves (ie taking insufficient reserves against future losses) and age of its physical inventory. Any finance professional would tell you that cash flow is king and "earnings" are basically a useless metric.
But the main answer of what happened is relying on the commercial paper markets to finance their day to day operations. GE basically was a bank, which became apparent when they had to ask the Fed to give the access to the discount window during the financial crisis.
Exactly. Welch never saved anything.
He walked away - he and his family - very, very rich after defrauding the market. You can't do the impossible and Jack Welch was no exception.
Welch cut out waste
Wow this is the best GE video i've seen on the internet. Interesting and informative sir. Please do more of these for other stocks!
Very good video here. I also made a GE video more about my position and my views on the company!
i worked at ge oil and gas in jax fl - we all saw first hand at the failures happening in management
same the have some of the dumbest people managing its unreal,
Alex Kitchen I was working for Dresser Skelmersdale before GE took over. Within 5 years everyone has been made redundant and work has moved to Italy, China and Mexico. Surprised that it lasted 5 years tbh, some of their procedures are laughable!
I took retirement instead of going to jax fl. I have lots of former co-workers that moved there and are still there plugging along. So I surely hope those people don’t get hurt.
Fancy financial goals make management forget the main reason for the business is to serve their customers.
Woopy - Agree!
I think buying Alstom was the biggest mistake. They paid $10B for a poorly managed company that is not making any money. The French government was lucky to find a buyer....
And the union is probably orthodox Marxist.
It's a close one between that and the Baker Hughes fiasco. Bought up most of the company, then changed their minds a year later and started dumping their shares. They looked like the keystone cops on that one.
Not sure whether it was a mistake or not at that time. But if they wouldn't have bought Alstom Energy division, at the moment GE power division would be loosing so much money.
When gaz market drow, say thank you to nuclear :)
Am I missing something Alstom is doing great. Selling trains all over the world including the US
@@MrJimheeren GE bought the Power Grid solutions business from Alstom. That part is not doing great...
I can tell you even before watching the video. It all started when Jack Welsh was CEO. He sent a mandate out to everyone at GE that he wanted every department to be number one or number two in the market. Of course this necessitated the sale off of profitable divisions like small appliances, light bulb manufacturing, and small gas turbines even though they made money for GE, they weren't #1 or #2 in the world.
GE made $1.5 billion dollars profit while laying off loyal and productive workers. Of course Uncle Jack did not care as he moved on like all royal executives with a golden parachute.
The demise of Immelt shows you when CEO's don't understand the contributions and interactions that divisions have within a company. When they listen to the analysts outside more than their own and instead fail to trust their own management by overruling them. When they fail to build a strategy looking into the future based on their unique fabric. They are not driven by long term goals but by quarterly success reports. When they get rid of their intrepeneurial spirit, exchanging it for corporate rules and regulations.
Jack Welsh in contrast was an approachable guy who had the ability to listen and to recognise talent in the field and his own company. He had his hand on the pulse of his own people recognising opportunities coming from within. He mostly admired initiative, resolve and managers who were quick thinking on the run, without loosing sight of the goal - to find a solution to the problems presented, to earn money and to keep the best people!
It was pretty obvious they were cooking the books for such large returns for an extended period.
As an engineer, I have more respect for the janitor mopping the office floor, provided he does it well, than for ANY finance experts or lawyers !
I agree, my fellow engineer (E & E)
The thing is, that janitor is probably an outside contractor, working on lowest bid!
Yay. You can say that again.
Funny how often financial experts seem to run companies to ruin, trying to profit optimize tends to sabotage the actual function and talent of a company
My Dad worked for GE in Toronto, Canada when I was a child. He was in Manufacturing and Engineering. I recall him coming home in frustration, saying, 'the accountants are running the show, and sacrificing the quality for the cash. That was in the late 50s. Go figure. Planned obsolescence will destroy you. I also recall Dad saying they had to figure how to encapsulate a switch with no air bubbles due to the bubbles exploding during high altitude flight. Times sure are changing and youngsters have no idea about what happened to give them all these advantages.
The biggest mistake was NOT firing Immult. When he started making bad deals, why didn't they boot him for someone competent?
Two possibilities: he had headed GE’s successful medical devices division, and he had been hand picked by Welch. While past performance and a major endorsement don’t make up for incompetence in leading GE, it explains why he was not immediately shown the door.
@@DovidM makes sense once you think about it. They couldn't just fire hin wothout some major consequences hitting the company short term
@@wolfboy20 Sometimes a short term hit is BETTER than a long term loss. The problem now days with CEO's is that they only think as to what is best for the market. The direction should always be "What is the best direction for the Company?" To me I see a CEO who was reactionary, instead of proactive. Someone who should basically say "We are GE, we are a market leader. This what we do, and support what we do" Honestly, it would have been better for the company as a whole to ditch him.
I think the video answered that point. Immelt was hired, essentially, by Wall Street. So every time Immelt was on the skids, he did as Wall Street wanted. He was their boy, so they kept him.
why? he is from Harvard. he must be always right.
the reason of Ge's failure : Harvard MBA education!
Wow. You should like one of the uneducated with no degree. Poor thing
@spudnic88 It's almost gibberish, in fact!
@@Tippy2forU no, paid for higher education is expensive brainwashing lol! you poor thing still lapping up that bs
@@Tippy2forU sounds to me like you werent born with any common sence ,, and it surely looks like your dumbed downed degree hasnt helped you at all
@@Tippy2forU hey mister dumbed down tell all of us how much you pay a month for your dumbed down degree with intrest every month over the next 30 years ,, im quite sure you are to stupid to figure that one out and the fact that bullshit so called univercity screwed you , i hope you are flipping patties at mickey d"s to pay just the intrest ,, im sure they didnt use any lube on you when they bent you over
I lost my job in schertz Tx over this BS
Over 200 Employees, All Screwed Over
The company I worked for was taken over by GE. At first I was excited but after a few short weeks I realized The level of idiocy from the people running the show. They took a highly profitable small company and proceeded to destroy it in a couple of years, then sold off what was left.
I worked at GE, the problem is the organizational culture, the manager blames middle management for all problems, and middle management is just a bunch of kids, some of them still studying, where I worked (GE Healthcare) my boss was 5 years younger than me and used to have my position but during the time I was there he didn't even get a pay increase from when he held my position, and the rest of middle management was in its early 20's with general employees being close to 40, why, because salaries were bad, the guy in their 40's had been there for 20 years while the managers would get a better job within the next year, so you ended up with a company where the employees did whatever they wanted, the managers had no idea what they were doing and were looking for another job since day one (me included) and the management just blamed other people for the problems they were creating. And this was GE Healthcare that runs with a profit, I can even imagine how bad things are at the rest of the branches losing money.
Let me guess, IMLP managers. I was 40 or so when I started at GE, it amazed me, they'd take 22y/o college grads, have them do four 6-month stints in various departments (having to "implement projects" they rarely finished in that time), and then at 24 they'd be full-time "managers" with really minimal actual experience and no real people management skills. And if they weren't off to another manager job within 3 years they were "stagnant". I'd estimate 90% of them were clueless.
I.worked.GE.Healthcare.1987to1999.Then.got.out.of.dodge.after.selling.my.stock.I.was.reading.articles.about.how.the.earnings.were.fake.back.then.But.then.I.come.back.for.a.few.more.years.The.guys.at.the.top...I.suspect.were.alingned.with.bankers.or.wallstreet.or.some.hedge.fund.that.profits.by.destroying.companies.Look.around.for.the.next.high.flying.blue.chip.to.crash.LOok.at.the.cars.and.planes.that.are.all.shite..how.long.have.they.been.building.these.things.and.FFS.recall.recall.recalls.I.think.its.purposeful.destruction.Clever.people.with.backing.know.how.to.destroy.a.good.thing.buy.it.on.the.cheap.and.turn.it.around.Look.at.Manhattan.in.the70's.They.destroyed.NYC.Who.bouaght.it.now.who.owns.it.
I think their biggest mistake was probably committing three decades of financial fraud.
Well said.
i dunno if that was a 'mistake' fraud typically isn't accidental.
i think your 'mistake' is misinterpreting the tone of my statement.
I think the "catering to investors" played a large part as well. Investors used to play the long game: big, safe companies with steady growth and modest returns on stock were favourite. Modern investors however are all about the "quick buck": buy and sell aggressively, dump divisions that momentarily underperform immediately and buy heavily into the latest hype. GE/Immelt did just that: they sold of the divisions that later proved to be the "goose with the golden eggs" and bought heavily into high risk oil and the oil-industry. It gave great short-term numbers, but hollowed out the company to an empty shell. But that's all modern investors want: grab the quick buck, hollow out the company and profit from the sales and then drop the empty shell.
@Paul Nolan The other guy's an idiot.
Interesting timing, please post an update once we know how the fraud allegations go.
New subscriber
I worked for GE for eleven years best job I ever had hoped to stay till retirement but they shut the plant and moved it abroad some
Of the work went to China to a brand new plant that suddenly appeared from nowhere
It takes time to right history. Thomas Edison wasn’t quite the man we thought. Nicola Tesla is now being rightly celebrated.
Or how Edison and Eastman were © pirates, copying cinema films by others and then distributing under their own business, so the original producer got no royalties.
JJ ,who are you ?
A war which was disdiagonised.
@@Jj-gi2uv - Einstein was a complete fraud. Other members of the tribe in the media and academia pulled the fraud to the top, because the tribe needed or wanted a science icon. Aren't we told he is the most intelligent man in history? A HUGE fraud.
@@WilliamJones-Halibut-vq1fs probably, no one else would have invented Ac power . Give the man his credit and move on from possibilities
A CEO needs to shepherd the company and manage shareholders. Being a shareholder lapdog never works out well.
GE problem :
- We need to make money today !!
- And tomorrow, or the day after tomorrow ?
- You don't understand...WE NEED MONEY TODAY !!!
yes this is true. worked there in finance for many years. deliver short term plan at any cost. no one cares about tomorrow. yet id like to say that i met great colleagues there that were very cooperative so i didnt mind working there.
Looks like Mad Money strategy. Get Jim Cramer to manage this humongous company.
Moral: Do not try to please the critics and the public!
Also, people, just because an ERON is scandalized, does not mean that all other big companies have similar business business practices
i was there from 97 till 04. Welch stretched the business to the limit. You could tell it needed some adjustments and re org. Immelt did the wrong strategy and completely missed the digital element in the portfolio. One of the tasks of a diverse business company like GE was to spot new areas of business to foster growth and they never did that
Great documentary. This saves me a lot of research I would have to do and it was fun to watch. Please make more!
The biggest question still unanswered today is how the hell did Immelt managed to be GE's CEO for so long.
An an employee of GE I can tell you how... he STOLE 3 Billion from the Pension Fund and gave it to himself and the Board Members in "Bonuses"... this while the company was circling the bowl. Now of course the Pension Fund is under funded and the rumors swirl about GE dumping the Pension for us remaining people that are supposed to get funds when we retire in a few years.
@@_Coffee4Closers Immelt needs to be jailed. Good grief!
@@bohan9957 for all the life, courageous people's life destroyed by his action.
This type of person must be put in jail for life.
This greed must be punish heavily.
I worked for GE & Jack Welch in the 80's. He was hailed as a genius but I always thought of him as a scumbag who knew exactly how to manipulate people to achieve what he couldn't do legitimately. Looks like I was right...30+ years later
Welp..R.I.P. G.E.
Rip TESLA
I worked for GE in the 90s and early 2000s right when the shit hit the fan. Totally agree with your comments. Always felt Jack was a scumbag. We all joked about how we had to sign off on an integrity oath every year, but it did not apply to that POS or any of his generals. Jack got out because he knew the shit was about to hit the fan.
David, indeed you were right. I read Jack Welch's book and I was one of the acolytes that believed GE could do no wrong. However when you get older and less naive you realize how big businesses like GE are less about providing value and having integrity like what was written in the book and more about being ruthless.
GE was doing something right back then. I still have a GE fridge that has been plugged in and running since it was new in 1986.
You should do a story on how Warren Buffet and 3G destroyed Kraft Heinz.
Lol, we are doing a Kraft Heinz one next. I was just working on it
Great Video. My experience with GE is in the Industrial Sector. They were king of the hill using bully boy tactics. They did and still do have great people, but to operate through brutish arrogance would never be a recipe for success. Normal business is Net 30, these greedy mothers went to Net 90 then net 120 and then net 150 days. What kind of ethical company treats suppliers in this way. Sad for the people that lost their jobs through arrogant and fear based management at GE. In many sectors they still have great equipment and can hopefully recover and be thw company they have the potential to be.
I worked for GE for over 30 years. Jack always asked for more profit every year from even the most mature sectors. There was always some 'magical' program (6 sigma) to do this. The pressure to achieve results was great. At some point you had no choice but to cut corners, screw vendors, ship production to the lowest cost country, etc. All done to keep the stock market happy.
I’m watching this video the day the news from Harry Markopolos came out about GE
3deaster think it’s fishy, I believe that there is going to be a turn around coming.
@@PhongNguyen-nz9kz nope. They are done. RIP
yip they are finished. will no doubt see many more videos in the coming months about how they failed. shame. i wonder if some high ups will go to prison though. thats the biggie. or will it be golden parachutes and palm off the blame to a patsy.
@@PhongNguyen-nz9kz I agree. My Spidey senses are tingling on this one. GE was being probed by the DOJ back in October 2018 for accounting fraud. This is nothing new. Somethings up.
from what i heard they will be filling for bankruptcy likely in the next 6 months and hopefully not getting bailed out.
Welch's protege, Bob Nardelli, at GE went to home depot n dam near ruined them. Then guided Chrysler from profitability n into bankruptcy
Only Welch looks like blessed with a golden touch.
This was fantastically in depth. Thank you so much for what I can only imagine was weeks or months of work! New subscriber
This and your Rise and Fall of Kraft Heinz videos are top notch
GEEE
from General Electric to Generally Everything Except Electric
Things that kill companies:
First, selling profitable subsidiaries to reinvest in markets that you're already the leader in.
Second, seeking continually increasing profits rather than long term profitability to appease shareholders.
GE committed both of those sins. Of course there are others, but these are the two that previously successful CEOs of companies with popular brands fall into. The second isn't necessarily the CEO's fault though, the board is likely to fire him if he doesn't continually increase profits.
This channel is increasingly proving how much time I have wasted reading autobiographies like Who said Elephants Can't Dance (Lou Gerstner), Straight from the Gut (Jack Welch) etc. Hope they don't have one for Michael Dell. He is one of the few other CEOs I used to admire during my college days.
Thank you but to be fair to Welch, we didn't critique him or go over his GE years. Our video was mostly just critical of Immelt. In terms of Gerstner, yes we really dislike him.
WAIT - Edison DID NOT found GE. Morgan owned edison financially, When Edison failed with the Niagra contract Morgan wiped him out and set up GE. Tarzan says it all.
Nope. I believe he founded the Edison Electric Company. Then when he failed at competing against Nikola/Westinghouse that is when Morgan & Shareholders took control of the company and named it GE.
Still proud working at ge aviation malaysia.. 🇲🇾🇲🇾
Hey, another point: Bell Canada had a cool monopoly on phones and telecommunications but priced themselves out of a great little niche. The share holders were far more important than the customer who paid all the bills. Now … is there anyone left who pays for a 'land line' as well as a cell phone?
The modern CEO seems to focus on investments, costs and profits over and above what a company is good at. Ensuring that a company and it's workers are able to do what it and they do best will provide profits efficiently.
You must not own a business.
@@T9RX3 OK, so how's it working out for GE?
I'm new to your channel, I really like your presentation. You maintain a interesting story that makes looking at all the graphs and technicals fun!
What brought down GE: two words Jack Welch! Jack was smart to get out of Dodge before the auditors moved in!
Charles Reece I assume Jack Welch originally got GE into what is now the insurance / accounting fraud business?
@@antonvoltchok7794 Read one of Welch's useless books. A waste of time but they tell you how out of touch he was.
After my uncle Ron graduated from MIT, he went to work at Honeywell's Arizona Location. *He has a HIGHER security clearance than I had WHEN I WAS ENLISTED* during my eight years of U.S. Army Nat'l Guard of Minnesota (8SEPT2008 - 8SEPT2016).
My MOS was 25U (twenty-five uniform) Signal Support Systems Specialist (troubleshooting/installing FM-Band Frequency-Hop Radios and Server Administration). I was in a Helicopter Battalion (UH-60 Blackhawk Helicopters).
Mostly good times except when I got multiple injuries (low-spine, left hip, sciatic pain; pins & needles down to my toes in left leg and foot/toes). I get NOTHING from the VA...
“The next chapter in GE's history is Chapter 11." - HM
@Milt Farrow I don't see P&W suffering though.
The Airlines choose which Engine supplier they want to use on their 737s - not Boeing.
Oof 😂
@Milt Farrow care to elaborate?
Assuming you even know?
@@beernpizzalover9035 So you are saying airlines can order a 737-maax without a GE engine? The entire reason for the 737 max was to use the new GE engines. Have another slice of pizza.
I sold my entire position of GE at $30.00 per share. I reinvestited the entire amount into Boeing at $132.00 per share.
Only time will tell as to just how "smart" I was.
Pretty brave considering the 737 Max ordeal is still ongoing.
@@MrToLIL This was long before their troubles began.
I mean besides Airbus in Europe Boeing pretty much has no competition, and they make so much shit for the military on forever contracts that I think you absolutely made the right move
@@antonvoltchok7794 At one time GE made everything for everybody. GE was the "best" company in the world. Nobody could have imagined that a company as savvy as Boeing would ever design a fatal flaw in the very heart of their system. I swear that if you ever have a chance to invest in drinking water: don't put all ofyour assets in it. Somebody will come up with a replacement for drinking water as soon as you do.
@@Dan-oj4iq definetly a good move considering BA is 370+ and has former exec's in the White House...and never ending contracts coming to it. The 737 will scare some investors but it's a solid company nonetheless.
Scholarly work. One of your best. Keep it up.
I worked for GE Healthcare Lifesciences, but this business was sold to Danaher and now I am a Danaher employer. Ironically, I am watching this clip in a GE owned techpark lol.
This was an excellent video please do more long-form videos like this!
Great video with clear detail. Given the recent revelations from Harry Marcopolos in the last few days this may end very sadly for GE and investors now!
I am not a fan of share buybacks but every time Imelt sold off part of GE he should have put 50% of the proceeds to share buybacks and 50% toward debt reduction clearly he had no idea what companies GE should buy or when,
Every time GE is mentioned in this video is the same # of accounting fraud charges they did over the years
These videos are fantastic, and border on thesis level examinations. Keep 'em up!
The biggest mistake was that after I took a look at Emmults face as he he first took on the job and thought that. “ this guy doesn’t have it” I stayed in the stock!
Very interesting. I'm a consumer, not an investor; so I hope they keep making GE appliances for old-time's sake.
Metrognome, GE sold the appliance division to Chinese company Haier years ago and hasn’t made appliances since thence. GE licenses the logo.
@@sportbikerdude Thanks for the update. I haven't knowingly purchased a GE product in years. However, I have had GE machines used on me for medical diagnostic purposes. I'm generally wary of products manufactured in China without a well-known label to back up the product.
I wrote this several years ago and it encapsulates why I do not like GE and have not for years:
About 12 ( actually 15 years ago now) years ago I worked on a contract at GE oil & gas. I had never been exposed to GE before. My main job was to review a bunch of engineering that they had sent to India as an outsourcing effort. I was a little curious about that since outsourcing was new. Why was GE outsourcing and why didn’t they review it themselves? Why did they feel the need to hire outside contractors?
The first question was pretty obvious. Outsourcing was cheap. The Indian hourly rate was about 20% of the American contracting rate. Of course, you get what you pay for. For the two years I was there we never received anything from India that could be used without being reworked. It was so bad that they were basically wasting their money outsourcing. I pointed this out to one of the older Tech leads and he just shook his head, “Welsh said it was good and no one questions God. Besides we charge you to the contract and not to overhead and none of the management cares.”
So, why didn’t GE review it themselves? Because they couldn’t. They had a crust of old time engineers, guys who were in their 50s and knew what they were doing (kind of like me at the time). But, everybody else was young and inexperienced. Particularly their managers. You see, at GE, you have all of these people with impeccable resumes (top notch engineering schools, MBAs, and Sigma Six training) who dress up well but have never been a plant engineer or started something up. They haven’t gotten their feet muddy on an oil rig or a platform, or walked a refinery. Their idea of engineering is to write a check to a real engineering company and make an entry into a database.
And that is the real problem with GE. It is all about the measurement, but not about the “nuts and bolts.” Their managers can fill in a mean spreadsheet but would have no clue how to change an impeller on a pump (heck, they wouldn’t even know what an impeller was).
So, I believe Immelt means what he says but he doesn’t have any mud on his feet either. Those guys who really understood the Oil&Gas business were long gone. That is why I don’t buy GE.
I wrote the above when GE was above 30 and before Alstom. The Alstom purchase floored me. When you think of high quality, efficient engineering and construction, France isn't the first country to come to mind. And, you really think the EU will let you make money? It was just stupid from the gitgo
GE stock went from 55. to 5. in 8 years. Screwed everybody
Very informative video. I should have sold my GE stock when Warren Buffet did. Amazing how a CEO could destroy such a grand company.
Shareholder Value!!!! The biggest lie that both GE and Boeing are suffering the consequences of right now.
I don't know, I work at an aerospace manufacturer and we still make tons of OEM GE aircraft engine parts. They're still building a ton of aircraft engines.
The GE aviation division is very valuable! I even say at the end, I think GE can still turnaround. It is still a great business, but its value was destroyed by Immelt.
GEMS was the bomb in the 1990s. Beyond question they were the dominant player, so it stands to reason that Immelr would have gotten the nod. Losing GE Capital meant that GE’s ability to always make the financing work out for their high-dollar deals is also gone. We recently bought a GE MRI, the numbers we were given by sales were “worst case”. The original numbers turned out to actually be optimistic, the final financing offer was ridiculous and was handily beaten by a local bank.
The magnet is high quality and based on that I expect we will buy another, but GE badly crimped our cash flow by delivering it months late after we turned down their financing offer. Any future deals will include specific deliver-by dates and penalties.
It ain’t the old GE, that’s for sure. Hard for it to be, after dismembering the body that way.
Thanks for the video.
Thanks for the 37 minute MBA. Wish you would analyze the fraud claims by the forensics financial/hedge fund group and GE claims that the analyst is lying. GE says the analyst is motivated by stock price manipulation.
Thanks for enjoying! We analyzed his claim a little on our twitter. His report dropped actually after our video. twitter.com/themarketisopen But we wouldn't have talked about him had it been after. Markopolos did excellent research but he reaches conclusions too easily. Like he will say an Apple is red and then will show you it's not blue and then say well it has to be red. That was basically his analysis. His whole report shows that it can't be one thing then he makes a far-fetched conclusion--which isn't to say he is wrong, but it is to say he didn't make logical conclusions.
We went through his report, and we are not life insurance experts but we noted many errors in his report on our twitter. One simple error is he said GE wasted Synchrony money on a buyback but if you see in our video it was a split off transaction not a buyback. GE trumpets it as a buyback since a splitoff is like that but Markopolos missed things like that, likely indicating he doesn't understand GE as well as he thinks. Or he didn't do as much research as he thinks.
Also even with all his knowledge, he just says GE should move its reserves to the Statutory rate (this number is already in GE's 10-K). As I said we aren't experts in life insurance but this number is disclosed.
The last thing is Markopolos makes odd conclusions. For example, he assumed that GE asked the Kansas Insurance Department that it could pay $15 B over 7 years because GE didn't have the cash. But maybe GE did it because it was more economical? Obviously paying $15 B over 7 years is far better. Then he makes the conclusion GE will need to pay $18 B right now! His IQ is either not that high (he definitely has an above average IQ but I don't see it being exceptional) or the people who questioned him didn't do a good job. I watched a few interviews with him but I wish I could see him talk for longer.
We talk a bit more about BHGE on twitter also.
I remember in the 90s where we all had the genuflect in front of anyone who spent 5 minutes at GE
Cool channel man, I love mini-documentaries so I subbed!
Thank You for this _long_ perspective approach on economics. Very rare, I seem to find only quarterly-based information and history is regarded nonexistent; this was very informative!
Agree, GE still has magic left to do the turnaround, but it's directives don't. They lost of sight completely what made this company so great. Now, in IoT or industry 4.0... where is GE? Is it lost? They thought they were a financial company. Now, what are they? What is GE? Is the confusion over? Or the end is on sight?
The biggest failure under immelt is growth thru acquisition. His philosophy is if we're not number one we want to get out. The flaw is when he acquired a company most ppl leave which cause a knowledge drain. So the company die internally slowly. Moreover, ppl that were capable to run it, did not bc leadership position is run by buddy buddy system. It's who you know and not what you know get you hire in leadership. The worst company I ever worked.
From what I see from this video the worst deal was leaving insurance has many of those companies associated with GE Capital were very good businesses and they sold the good and keeped the terrible life policies which mean an entire generation of people have to die before making money. In Regards to the alstom deal the margin of GE Power was good because of the Shale boom which reduced price of Gas and accelarated the Gas turbine market, it has since cooled a lot and their competitor Siemans has expressed desire to leave the market.The Brain drain isn´t severe I have no doubt that some of GE inovations are some of the best in the world. People think of Tech giants as inovation leader but GE inovations arent in software, they come from mechanical prowess, its an industry were you spend bilions to increase efficiency by 0.5% and they´re manufacturing process I can tell you for the rest of the industry it will take a decade to get we´re GE is now, in terms of composite materials parts, which is simple in theory very hard to produce in large quantities, because its still too labour intensive even with complex machinery(at least to achieve a degree of quality that Turbines require).
I always thought Jack Welch was a fraudster, every quarter, I mean every quarter he met or exceeded Wall Street analysis estimates !! How the hell was that possible ?
Pedro Réquio dude you’re overblowing GE’s prowess, take their jet engines for example, both military and commercial, they are some of the most complex electromechanical machinery out there, yet PLENTY of companies make just as good engines as GE does, some models even better , some worse, but don’t act like GE is anything special
@@sevewonn8567 it isn't
@@antonvoltchok7794 Like in Gas Turbines, Siemens have very good, reliable and widely used ones but GE's are more efficient period. Has for plane engine others make very good engines reliable, and in the case of rolls Royce very easily maintained, but GE is leader for a reason(just in case CFM is GE), and in the big engine department others don't have anything like the GE90 let alone the new almost entering service GEnX. CMCs alow for much greater temperatures in the combustion chamber and high pressure turbine which allow for industry leading compression ratios, which allow for greater efficiency albeit with reduced specific work which they compensate for with greater fan at the front and more air going both trough the bypass and the engine itself. Higher temperature diferencial and greater pressure ratio are thermodynamics principals which are paramount to an engine efficiency, the guys at GE know this, at Pratt and Whitney know it and at Rolls Royce but GE is the one with the material which weren't designed originally for aircraft engine. The fan at the front for material and mechanical engineers is considered a piece of art that has been around for 20 years and no one as replicated it, there are no patents in aviation its all industry secret. And GE are the best ones.
As a trader of GE shares this video provides in depth background on this corporation. Very useful
As a exec in the banking industry it a tricky business to manage stock holder relations - but to go for short term accolades from stock holders at the cost prudent balance sheet management is a recipe for failure-and future losses - hidden strengths are better then hidden weaknesses -mike
This is Edison’s legacy. Figures.
Like electrocuting elepahants
Not really. Edison got forced out in 1892, when JP Morgan engineered a merger with another company. Afterwards you had the GE we knew of - that is why its founding date is April 15, 1892. Citing Edison is more a case of some corporate marketing.
Michael Dunne
Birds of a feather flock together.
Yeah, that old White male, Thomas Edison. Let’s all turn off the lights to spite him.
DovidM
Yeah, without Edison’s light bulb, maybe Tesla would never have thought to light them with AC and we wouldn’t have electric power in every home. Edison was a sore loser, a robber baron.
A guy I know high up the ladder at GE was trying to get me to interview last year. At the time I wanted to see something through at my current job. But now I was thinking maybe I should reconnect soon.. or maybe not lol. Joining a sinking ship doesn't sound fun.
@Majik Siracco It sounded nice because my work usually involves travel and the job was more R&D type work, the pay and benefits would have been nice. I could move to a couple other big companies instead. Networking pays off. Wonder how the guy is doing at GE, he seemed stressed out more since he made the move years ago.
Just discovered this channel, great stuff I stand sub.
Looked thru the library and there’s a lot of Tesla-centric content with topics that expire quickly.
Love this GE and the stamps video. Keep up things like this for sure :)
The depth and detail is awesome. You may also want to cover recent or even historical one time incidents as smaller videos. Love your approach to telling the story.
Keep it up :)
Thank you! We definitely do love Tesla but with more subs, we can definitely feel more confident digging in and doing a long form analysis like GE and Stamps! Thanks! We have a few videos in the shop now on Kraft Heinz (similar format ) and Disney, slightly different but similar
This why I’m glad Tesla doesn’t listen to Wall Street analysts. A bit worried they are kinda listening to shareholders though.
There is a difference between GE investors and Tesla shareholders and investors. Most shareholders are only looking for a short-term profit. Tesla shareholders are in for the Long Haul they're more concerned with the future of humanity than simply making a profit next quarter or next year.
@@loungelizard836 Correct, Tesla Investors are not concerned with short or even midterm profits
Trigger Troll - Could you please explain these claims & provide a few links to support them? I just don’t see how mining Lithium & the other materials needed to make Li-Ion Batteries requires the oil industry, & I certainly don’t see how the manufacture of batteries & BEV’s requires oil companies. In fact, their “Business Model” REQUIRES the failure of Tesla & of EV’s in general - Why do you think Chevron Oil bought the patents for NiMH Batteries & then killed them to destroy the EV industry in the 1990’s?
www.ev1.org/nimhsup.htm
books.google.com/books?id=riuQDgAAQBAJ&pg=PT243&lpg=PT243&dq=metal+hydride+batteries+general+motors+standard+oil&source=bl&ots=V4X0_Wilm9&sig=ACfU3U0x3CbmuLWpXQE9Ca0pqFEljYTWgA&hl=en&sa=X&ved=2ahUKEwiatvHW8o3kAhUsFzQIHY2ZAa4Q6AEwEHoECAMQAQ#v=onepage&q=metal%20hydride%20batteries%20general%20motors%20standard%20oil&f=false
en.m.wikipedia.org/wiki/Who_Killed_the_Electric_Car%3F
While Tesla can’t “save humanity” on its own, the trend (that of people buying & manufacturers making EV’s) Tesla has started will most definitely help the environment & may help to slow Global Warming.
Trigger Troll. We have to compare well to wheel CO2 emission of ICE vehicle with mine to wheel CO2 emission of BEV. Obviously, the emission level of ICE vehicle is around two fold of BEV. The production of lithium mineral does not consuming massive energy as like vehicle since the production process is similar as salt production which are using the energy from sun rays. Also the emission from power plant is relatively less harmful than the emission from ICEV because it is locates at stranded area from human city life and the emission is cleaned effectively by centralized efficient emission control system. However ICEV is generating toxic emission on the street of city and the emission is not effectively controlled as we observed from VW scandal.
Trigger Troll so we can run gigantic trains on electricity but you’re saying it’s impossible to run mining equipment on electricity?? How is it that right now there are companies already manufacturing electric mining vehicles successfully?? also instead of having 1 big ass vehicle you could have 2 smaller electrics, the two largest cost centers by far in mining are fuel and ventilation, you are freeing up most of your costs and would not only be more profitable but easily be able to purchase more electrics to meet the demand, super weak argument so far sir
In all my years of living, General Electric has went from my personal perception of a 'Space-Time Vortex' for a logo; to a company that got sucked into its own black hole in a span of decades.😵🌚
Simple, sold off high earning divisions, invested in higher risk, more volatile businesses. GE was essentially a equity firm, and they were unloading cash cows to make bad investments.
Bottom line, GE was already a house of cards that Jack built, and his successor chipped away at the foundation in order to add to the top of it.
I think you failed to analyse the CEO compensation. His motivation was not only to please stakeholders. I would imagine that his remuneration was tied to stock performance and as it was common practice before the crisis to award CEO with stocks and stock options, hence his focus on the share price. Therefore he was in fact ensuring he gets a fat piece of the pie. Other than that, great video!
Never, ever sell your cash cows.
Yup, selling NBC was a massive mistake
Biggest mistake was relying on Immelt to head the company when common sense would choose otherwise. But another thought is who was on the board that allowed these mistakes to be repeated over and over again. In other words who was benefiting from this long steady downfall.
I wish to see the next video as "The turnaround of GE"
Jeff Immelt is one of the best and most honest people that I know. He walked into a disaster with 9/11 and the market that existed when he took the reins from Welch.
I have a General Electric lightbulb that has lasted for like 20 years.
I worked for GE for 30+ years. Our project team dealt with Immelt on a couple of projects. He may have a math degree from Dartmouth and a MBA from Harvard but he was no financial genius. We were shocked when he was identified to become the CEO after Jack Welch.
This is too complicated of an analysis. The real story is simply that of a massive, unwieldy conglomerate that confounded M&A activity with actual "shareholder value"; it lost sight of the customer, it lost sight of the competition, and it lost sight of technological trends shaping the industry. *The End.*
GE medical equipment is still leading company in hospital radiology
But where will we get parts? Thrump has pissed off the chinaaa connect. China will sabotage and make defective parts, radiation every where.
I'm afraid their MRI scanners are the worst in the business. Siemens 1st followed by Phillips.
@@sqeekykleen49 so, you should be pissed at China and our previous government for pillaging America. Trump is trying to fix it.
Frank V
The Green Bike Rider - I actually worked MRI and CT with all those three brands for many years. To start Phillips is the worst, not only in my opinion but most of my peer techs agree, it’s complicated to use, images are terrible and malfunction constantly for any reason. Siemens I love their user friendliness and they constantly advance their products to be modern and “smart” but in all honesty my favorite happens to be GE in all modalities, is like the difference between and automatic car and stick shift car, computers make you commit lots of errors no matter how advance, I rather be in control and trouble shoot my machine myself.
@ Squeaky Clean - that’s funny but things don’t work like that in healthcare or Radiology in America, there are organizations in State and Federal levels that monitor and regulate standards of radiation safety for every single patient in all health care facilities. Every machine that emits radiation is mandatory calibrated and tested every single day and has to pass QA before putting a patient in.
I think the biggest mistake was not firing Immelt earlier. Equipment margins dropped under his reign as shown in a Trian presentation yet no one commented ever...