Under CEO Jeffrey Immelt, General Electric is divesting or shrinking parts of its financial services businesses (which took a hit during the 2008 financial crisis), in order to return to its roots as an industrial manufacturer. With a $3 billion loan from Warren Buffett, GE has spent the past six years adopting practices that imitate startups in Silicon Valley to take it in this new (old) direction.
GE indicates that it can bring more manufacturing jobs back to the U.S. and improve competitiveness by focusing on quick turnaround. It has set up a growth board called FastWorks to evaluate new technology ideas and make speedy decisions on which ideas to green-light and spend time and capital developing. Ideas come from GE employees or are being crowdsourced.
FastWorks operates out of a GE R&D center in San Ramon, CA that opened in 2012 and now employs 1,000 people. GE is developing the software to connect to heavy machinery and to make equipment more efficient. FastWork-related projects include new flow meters for oil wells, a new diesel engine and a dual-fuel power generator.
In its industrial restructuring, GE is emphasizing infrastructure markets. Another theme at work in the strategy is manufacturing products for export to emerging markets in need of materials and equipment for building houses, bridges, roads and airports. Global markets that consume more keep GE manufacturing.
As GE exits consumer financial services and focuses on being an industrial tech company, it plans to grow its infrastructure earnings to be 70% of GE’s total by 2016 (compared to 55% in 2013).
GE’s imagination is at work to bring America manufacturing back to life, but it will take years, if at all, to replace the more than 1 million manufacturing jobs that the U.S. lost during the financial crisis and recession.