Trop vast, too complex, too sclerotic: like many empires before it, General Electric (GE) collapsed under its own weight. This disappearance once again raises the question of the future of these large conglomerates which have marked economic history for two centuries. In recent years, a number of American industrial icons have chosen to scuttle themselves to survive the new times: United Technologies, DuPont, IBM… A movement that goes far beyond American borders. In France, the slow dissolution of the General Electricity Company, the French equivalent of GE, with its offshoots Alcatel and Alstom, spanned more than thirty years, when its German counterpart Siemens is in the process of doing so in turn. . Not to mention the Dutch Philips or the Japanese Toshiba, all electricity giants.
For the most part, they had little choice. According to Bloomberg calculations, over the past five years, GE’s value has fallen 51%, while the S&P 500 stock index has exploded by 117%. This disavowal of the financial community sanctions sluggish growth, sluggish results and considerable indebtedness. If Siemens escaped this dishonor, it is because it began its dismantling before the Stock Exchange urged it to do so.
There is nevertheless a paradox in witnessing these collective suicides of groups born around the applications of electricity, at the very moment when this energy is required in all industrial fields, including the automobile. Apparent paradox, it is precisely because electricity is becoming commonplace everywhere that specialized players are able to do better than these jack-of-all-trades whose activity has recently focused on the purchase and sale of electricity. activity in an increasingly frenetic movement. During his sixteen-year tenure (2001 to 2017), GE’s previous boss Jeff Immelt bought $ 150 billion (€ 130 billion) in business and sold more.
Spread the risks
This does not mean that the principle of large diversified companies no longer has a future. Their size makes it possible to pool costs, exchange experiences and distribute risks. They are particularly suitable in areas of strong growth, where it is prudent not to put all your eggs in one basket, if only to prepare for the future.
As long as growth is there and culture remains a strong glue, investors will follow suit
You have 28.51% of this article to read. The rest is for subscribers only.