Happy G. E.

In the ten years 1930-39, General Electric rolled up a cumulative net profit of $75,526,077. It managed to do this in spite of the fact that its most important market collapsed soon after the decade began. This was the utility industry, which had been spending $740,000,000 a year for new electrical plants in the 1920s, cut its buying down to an average of $340,000,000 from 1933 to 1939.

The reason G. E. did so well in the '30s was a new market: the consumer market for electric refrigerators, irons, and other domestic appliances. Hand in hand with the sale of mass-production appliances went an increase in utility sales to residential customers--up 109% in kilowatts from 1929 to 1939. This major boom did not suffice to enrich the utility industry, which had too many other troubles. But it did enrich G. E.

Last week G. E. saw clover ahead. Not only was the consumer-appliance market holding up nicely, but the old utility market for capital goods was coming back with a kick. So, moreover, was another market with which G. E. had not done too much for years--marine turbines and other Navy electrical equipment. By last week G. E. was building more land and marine turbines and generators (over 2,000,000 horsepower) than ever before.

Over half of this business came from utilities and industrial users of heavy electrical equipment. Within the last few weeks, private utilities have stepped up their 1940 construction schedules by 20%, to over 1,520,000 kilowatts--which should bring new utility capital outlays to within striking distance of the average for the 1920s. Installations scheduled for 1941 and 1942 are up over 1,000,000 kw., now total 2,877,150 kw. (including municipal & Governmental additions: 5,802,100kw.).

Reason for this revival is Defense, which, with its promise of a heavy industrial electric load, has made the utilities more capacity-conscious than ever. G. E. now wonders how long its own capacity (especially in skilled labor) will hold out. Meanwhile, these tailor-made jobs yield G. E. a handsome profit margin. So confident were G. E.'s new chairman and president, 40-year-old Philip Dunham Reed and 53-year-old Charles Edward Wilson, last week, that they boldly confronted the one big licking G. E. may have to take--a licking also attributable to war. This is on the $56,200,000 worth of G. E. property abroad, of which $29,100,000 worth is outside the Western Hemisphere. G. E.'s reserves, they said, not counting its $124,310,000 earned surplus, are big enough to permit a write-off of the whole extra-hemispheric investment.

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