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GE, GM Are Manufacturers to Watch in 2019

Bill Koenig
By Bill Koenig Senior Editor, SME Media

COMMENTARY

It’s not hard to figure out which manufacturers to keep an eye on in 2019. Two were big newsmakers this year.

General Electric Co. (Boston) was once the gold standard among big manufacturers. Its lineage could be traced to Thomas Edison. It was respected on Wall Street.

Not so much these days. It changed CEOs this year for second time since the summer of 2017. The company slashed its dividend to conserve cash. Its power business is a mess.

Lawrence Culp became the latest CEO after GE’s board determined John Flannery wasn’t up to the job. Culp was on the board and got the CEO keys.

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Lawrence Culp: On the GE hot seat

Once upon a time, GE was a conglomerate. Under former CEO Jeffrey Immelt, successor to “Neutron Jack” Welch, the company gradually got out various businesses to concentrate on manufacturing.

GE has strengths, including making aircraft engines. It’s also trying to be a force in 3D printing. But the power business has dragged the company down.

Culp announced in October that the power business will be split in two. But analysts following GE say that business won’t be fixed quickly.

The question will be whether Culp can respond quicker and more decisively than Flannery, who had taken over from Immelt in 2017. While manufacturing is forecast to expand in 2019, growth may not be as robust as this year. Culp may not get much external help.

GM’s Cuts

General Motors Co. (Detroit) announced immediately after the Thanksgiving weekend that it intends to close five plants in the U.S. and Canada by the end of 2019. It’s also moving to make making deep cuts in its salaried workforce.

That’s not making CEO Mary Barra very popular. She’s been criticized by President Donald Trump. “I don’t like what she did,” the president said in an interview with Fox News.

Barra also has drawn fire from members of Congress, especially in Ohio, where the company’s Lordstown car-assembly plant is on the hit list. Barra made a trip to Washington where she heard plenty of complaints.

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GM CEO Mary Barra

Officially, the plants aren’t being closed. They’re just being “unallocated” for new models. Having them declared “closed” will require union negotiations.

In the meantime, GM said Dec. 14 that it has a plan “for the majority of employees” affected by the plant shutdowns to be offered at other company factories. In the U.S., GM said it has 2,700 available jobs at factories. About 2,800 hourly workers are affected by the planned U.S. plant closures. More than 1,100 hourly employees have volunteered, according to the company. Also, about 1,200 of the workers are eligible to retire.

Still, the end of 2018 wasn’t a great look for GM. Politicians prefer running plants to empty ones. One of the operations targeted for shutdown is GM’s small-car plant in Lordstown, OH. It’s right off the Ohio Turnpike. Once production ceases, Lordstown will be a major symbol of this round of GM cuts. What’s more, GM still is proceeding with paring its salaried workforce by 15%.

The automaker received a $49.5 billion U.S. bailout in 2009. For Barra, the cuts are needed to ensure GM doesn’t get itself endangered again. On the other hand, the cutbacks show how temporary “saving” the auto industry can be.

At the same time, 2019 also is when GM has said it will begin deploying self-driving vehicles commercially. Autonomous vehicles are a big part of Barra’s vision of GM future, along with more “electrified” vehicles. For GM, both its “legacy” operations and its future strategy will be a big part of its 2019.

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