GE Transportation’s Earnings Report a Mixed Bag

17Apr2009 Filed under: Economy, Erie, Pa., GE Transportation, Manufacturing Author: Peter Panepento

A few bullet points from today’s first-quarter earnings report from General Electric Co.:

– Revenues at Erie-based GE Transportation totaled $1.1 billion, up 2 percent over the same quarter one year ago.

– While revenue was up, profits were down. The profit for GE Transportation totaled $217-million, down 15 percent over one year ago.

– Orders during the first quarter for the Erie business totaled $940 million — a hefty sum that suggests business isn’t falling off the table despite the recession. Still, that number is down 10 percent compared with one year ago.

– GE Transportation is seeing increased demand for its propulsion products, including wind products (meaning demand is dipping for its core product, locomotives).

– A quote from Lorenzo Simonelli, GE Transportation’s President: “We are managing through a prolonged global recession and declining demand worldwide. Domestic and international rail customers alike face steadily declining freight volumes and overcapacity prompting them to take a conservative stance on new orders. However, we continue to invest in new products to maintain our leadership in technology.”

We already know this is a lean year for GE Transportation and that jobs are being cut at the company, which is Erie’s largest employer. But these numbers suggest the business remains healthy. In past recessions, the company has seen much more significant swings in its business.

This time around, the recession is much deeper, yet business isn’t dropping off to the same degree that it has in the past. The company is much more diverse — so it is better able to ride out a substantial drop in locomotive demand.

Ultimately, this bodes well for Erie’s economy.

Tags: Economy, Erie economy, Erie, Pa., GE, GE Transportation, industry, Lawrence Park, locomotives, Manufacturing, recession

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3 Responses to “GE Transportation’s Earnings Report a Mixed Bag”

George Vietze
April 19th, 2009 at 8:22 am

GE as Erie’s largest employer is very important to Erie’s econommy.
My research over the last three years, sinced I moved to the Erie area, raised the question why GE Transportation who once employed over 10,000 employees and now employee in the 5000 range and owns an under utilized site and who parent company invests in major water energy and other energy products has not chosen the Erie site to expand their operations? In speaking with both current and retired GE employees the response was that when GE downsized over the years and had empty buildings that were not utiliized, the real estate taxing authorities, when requested, would not lower the real estate taxes on the empty buildings so GE decided to tear down those buildings.
When expansion was considered it involved building new buildings and therefor other options ensued in other areas. In fairness, some of those buildings were outdated significantly. My point, is that the community should take some responsibility and treat GE as a partner and not make decisions based upon some perception that companies like GE can afford to subsidize unfair costs.

Hopefully the economy and GE will bounce back soon because this cut back has affected Erie because current employees are not choosing to invest and spend in the Erie area until they feel safe about employment opportunities. For example, I have sold one of my lots in my development project to a GE employee who wants to live in the country and commute to work but after selling his house has decided not to build on the lot he purchased until his job is secure.
Jim
April 19th, 2009 at 9:02 am

It certainly illustrates the disconnect between local politics and business costs.
Jim
April 23rd, 2009 at 6:13 am

Bloomberg had some interesting coverage of the GE annual meeting yesterday. Apparently Immelt remains under pressure from shareholders, especially retirees about the company’s performance under his leadership. The Bloomberg coverage yesterday was in start contrast to the Erie Times article this morning, where the headline reads “GE exec: Economic crisis resets capitalism”. The closest the Erie article comes to explaining shareholder concerns is where they report ” He tried to assure shareholders that GE has positioned itself for an economic recovery…”

The Erie coverage doesn’t reference the shareholder concerns at all, and the Bloomberg coverage essentially, at least to this reader, illustrates company management that ignores shareholder concerns, and a CEO that doesn’t believe he needs average shareholder support to continue to hold on to his position. Immelt has made it plain that the economic hardships his leadership can created for shareholders, especially the retirees, is not his concern. GE shares closed Wednesday at $11.80.

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About 'Outside Erie'

Peter Panepento After more than six years working as a journalist in Erie, I'm now the web editor for the Chronicle of Philanthropy in Washington, D.C., and the publisher of GlobalErie.com. I still maintain close ties to Erie - a community that I care about deeply. I hope this Web site can help inspire a better future for Erie.

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