General Electric Co. (NYSE: GE) looks like it is taking its previous reorganization a step further. In July, it announced it was bringing together its financial services businesses under a common umbrella. The goal was to enhance GE’s abilities to grow globally, better allocate capital, and reduce costs. GE is now announcing a new GE Capital organization structure which will take place on January 1.
The new structure consists of organizations in Europe, Asia and the Americas. It has also created two new platforms:
- one for consumer-focused international banks and JVs,
- and one focused on optimizing returns on non-strategic assets.
Michael A Neal, chairman of GE Capital, said GE has acted to improveits funding position and has reduced leverage. It has alsosuccessfully raised capital and accessed government programs that levelthe competitive playing field in financial services. He also notedthat it has improved its 2009 funding outlook.
The company believes that this will help lower costs, operateefficiently and capture profitable, high-margin originations across keyplatforms and geographies today and as the global economic situationstabilizes and begins to recover.
Further, it is projecting approximately $2 billion in savings at GECapital in 2009. If it can save $2 billion, that will make up for alot. Unfortunately for the economy and for the company, $2 billion isnot what it used to be and is still a drop in the proverbial bucketwhen you consider that GE as a total entity generated $172+ billion in sales in 2007.
Jon C. Ogg
November 18, 2008
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