Does GE Stand for Global Economy?

As global in its operations as this industrial giant has become, does “GE” really stand for General Electric?

June 23, 2000

As global in its operations as this industrial giant has become, does "GE" really stand for General Electric?

But General Electric has managed to hold its grip by being savvy enough to realize that to defend a 100-year record, you have to look ahead — and offer a persuasive vision. In the days when advertising slogans were few and memorable, everyone knew that GE could “bring good things to life.” But, recently, this usually circumspect corporation has let down its guard.

Many consumers and investors still see GE as the old industrial corporation that traces its roots back to Thomas Edison, the great inventor. After all, it is the only original component of the Dow Jones industrial stock index that is still part of the Dow. Mention GE, and most people think of aircraft engines, gas turbines, refrigerators or light bulbs. But that view is about as fuzzy as a 1950s television set.

The old GE experienced a dramatic transformed under its present leader, Jack Welch. Soon after Mr. Welch took over in 1982, he began focusing on delivering financial services: first in the United States, later worldwide. His decision to buy leasing, consumer finance and insurance companies was perceptive at the time, and looks almost visionary in hindsight.

GE’s reinvention as a financial services company was not just smart, it was also extremely profitable. While the industrial businesses are well run, the financial services arm GE Capital habitually contributes over 40% of GE’s revenues and profits.

Returning to the advertising slogans, it seems there may be a stealthy message in the new line: “GE — where we know that understanding the global economy is everybody’s business.” Suddenly, it’s obvious that “GE” no longer stands for General Electric, but for Global Economy — a far more ambitious label.

Provided GE can live up to its name, it is worth considering as a long-term investment for retirement. You can count on GE to still be tops in the Dow when we turn toward the 22nd century. After all, the global economy certainly looks like it is here to stay.