GE badge could be put on ice

20. května 2013 v 9:01 |  solar charger
Blankenship is the new head of the $8 billion GE business that makes the company's last consumer brands, including dishwashers, refrigerators and light bulbs.

He took over the post in January, as the company increasingly shifts its focus to industrial products such as locomotives and jet engines.

Immelt, who engineered the strategic shift, plowed $1 billion into new appliance offerings and factories in the United States, in a bid to make such products stand out and reap higher profits against competitors from Korea's Samsung Electronics to China's Haier Electronics.

Blankenship's performance may well determine if GE stays in consumer brands or completes its evolution away from the products consumers know best.

"We said we could do it if we got that investment, and now we're at the point in this experiment where we have to be able to do what we say," Blankenship, 46, said in his first interview since taking over his new post. "We're making the last products with the GE monogram on them, and we want to make sure we do that justice."

Blankenship succeeded Charlene Begley, No. 29 last year on Fortune magazine's list of the most powerful women in business, when she took a medical leave. The appointment is intended to be permanent, GE said.

His success requires navigating a shift away from the incandescent light bulb, one of founder Thomas Edison's most recognizable innovations, and tepid demand for refrigerators and washing machines as the U.S. housing market recovers.

Faced with competitors that captured larger shares of the market for light-emitting-diode bulbs, GE went big, overhauling entire lighting systems at corporate offices for Marriott International and MetLife. In appliances, the company introduced a finish designed not to clash with stainless steel or other colors to tempt buyers who want one new item, not a whole new kitchen.

GE is starting to see results. Operating income at the division Blankenship inherits grew faster than at any other unit in the first quarter, surging 39 percent to $79 million.

That still represents just 2.2 percent of the Fairfield, Conn., company's $3.53 billion of net income in the period. What's more, its profit margin of 4 percent is GE's second-thinnest, trailing only the new and rapidly growing energy management division.

Not all the benefits GE receives from the unit accrue to the bottom line, though, said Christian Mayes, an Edward Jones & Co. analyst in St. Louis who has a hold rating on the shares. Only about 58 percent of the company's stock is held by institutional investors, the seventh-lowest among companies in the Standard & Poor's 500, data compiled by Bloomberg show. Appliances and light bulbs help connect GE to the rest of its owners, Mayes said.

"That's how a lot of people know the company, from their refrigerator or dishwasher, and they trust it," Mayes said in a telephone interview. "A lot of the relevance of this business is that it's so recognizable to retail investors."

To lead the business, Blankenship wanted a better understanding of its products. Not long after taking over the appliances unit in 2012, he hauled a dishwasher into his Louisville, Ky., home and took it apart.

Since then, he's spent a shift every month or so on the factory floor, helping to assemble refrigerators and water heaters.

"I'm a product guy from way back and I want to know what we're trying to make and sell," Blankenship said.

The new Home & Business Solutions CEO, who has a doctorate in materials engineering from the University of Virginia, began his GE career in 1992 at the company's research and development operation before moving to the energy and aviation divisions.
 

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