The Century-old Industrial Giant Is Divided into Three, and An Era Is Over!

On November 9, General Electric Co. announced that it would split the company into three separate companies, focusing on aviation, medical and energy, respectively, marking the division of the American industrial giant with a history of nearly 130 years.

According to General Electric's plan, the split of the medical and energy sectors will be carried out in early 2023 and early 2024, respectively. Industrial giants Siemens and General Electric (GE) have split up one after another, which is a compromise to the market.

According to a statement on November 9, General Electric’s healthcare division will be spun off in early 2023; the company will also merge its renewable energy, power equipment, and digital businesses into a single division, and then spin off in early 2024 ; The other company is composed of the aero engine manufacturing department.

After the spin-off is completed, General Electric’s current CEO Larry Culp will lead the general aviation business and serve as the non-executive chairman of General Healthcare. Scott Strazik, the current CEO of GE Power, will serve as the CEO of the combined renewable energy, power and digital business.

GE stated that each company will better serve its customers and benefit from professionalism and flexibility. As operations improve and improve cash flow and profit margins, by the end of this year, the company is expected to achieve a three-year debt reduction goal of 75 billion US dollars.

Since the 2008 financial crisis, General Electric has been in deep trouble and its business scale has been shrinking. The company has sold most of its businesses, including its financial subsidiary GE Capital.

"Empire" no longer exists

General Electric Company (GE for short, founded in 1892), is the world's largest multinational company providing technology and services, headquartered in Boston, USA. Since Thomas Alva Edison founded General Electric Company, GE has gradually grown into an outstanding multinational company in the diversified development of the company, with operations in more than 100 countries around the world and employing 315,000 people.

GE's main business areas involve 10 categories of power equipment, electrical equipment, household appliances, jet engines, medical appliances, aerospace equipment, and a total of 250,000 products. Among them, large-scale thermal power plants and nuclear power plants, complete sets of equipment, medical appliances, jet engines, industrial materials and other products occupy the world's leading position. The electrical engineering field is the foundation of GE's development. It produces more than 100,000 kilowatts of gas turbines accounting for half of the world's ownership, and produces 950 large-scale steam turbine generator sets. Half of the electricity in the United States is produced by GE's units.

On December 18, 2018, the "2018 World Brand Top 500" compiled by the World Brand Lab was announced, and General Electric ranked 14th. Ranked 48th in the Fortune Global 500 in 2019. In July 2020, Forbes' 2020 Global Brand Value Top 100 was released, and General Electric ranked 20th.

In the 1980s, under the leadership of the late former CEO Jack Welch, General Electric expanded rapidly: The company entered the financial services industry and re-entered the broadcasting industry through the acquisition of the National Broadcasting Corporation (NBC). This series of operations was Investors have brought enviable income growth and returns. During Jack Welch's administration, General Electric's stock price rose nearly 28 times. When Jack Welch was leaving office in 2000, General Electric once became the world's largest company by market capitalization with $594 billion.

In recent years, the company has been plagued by high debt. The company has undergone multiple rounds of structural layoffs. During this period, this huge company sold a large number of businesses, including the lighting business initiated by Edison and the general financial (GE) that Welch carefully cultivated. Capital) most of the business. General Electric's business focus has also undergone several adjustments. The company had bet on digital transformation, but the entire transformation was not smooth due to the radical plan.

The split of General Electric is not unexpected. This will inevitably happen as the global economy gradually transforms from industry to digitalization. Siemens, GE's European counterpart, has undergone this historic change. It has shifted from a giant model in the past to a diversified business model, making itself more of a holding company like Berkshire Hathaway.

In July 2018, Siemens Medical was split and listed, becoming the largest IPO in European history, with a current market value of approximately 67 billion euros. Medical is the most profitable of all Siemens businesses, and the Siemens Group is still the largest shareholder of Siemens Medical. In September this year, Siemens Energy was split and listed, and its current market value has reached about 20 billion euros.

Analysts believe that the medical and aerospace divisions spun off from General Electric are also expected to be listed separately in the future, which is undoubtedly a good thing for the relatively lucrative business. The company's CEO Larry Culp also said that the company will be more strategically flexible after the split.

However, the news of the end of the industrial giants also made the market a little bit more embarrassed. As one of the first foreign-invested companies to enter China, General Electric has trained a large number of talents with international experience for China's industry, energy, and medical industries.

Looking back at GE's past glory, in 1896, the Dow Jones Industrial Index was established, and General Electric was one of the 12 companies on the list at that time. Except for a brief break from the index before 1907, General Electric has always been part of the Dow Jones Industrial Index. On June 20, 2018, General Electric was removed from the constituent stocks of the Dow, bringing its 111-year history of constituent stocks of the Dow to an end, and all 12 companies disappeared from the constituent stocks.

In recent years, with the rise of Internet technology giants, traditional giants such as industrial manufacturing and energy are trying to keep up with the pace of transformation of the times and regain their vigor. It is not uncommon for giants to transform their businesses and even split and reorganize. In the future, after the split of General Electric into three independent listed companies, the extent to which it can promote operational improvements to achieve sustainable profitable growth in the current business portfolio, and whether it can revive the glory of the year, still needs time to test.