[HN Gopher] GE is laying off 20% of its workforce devoted to ons...
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GE is laying off 20% of its workforce devoted to onshore wind power
Author : mfiguiere
Score : 168 points
Date : 2022-10-06 16:10 UTC (6 hours ago)
(HTM) web link (www.cnbc.com)
(TXT) w3m dump (www.cnbc.com)
| boringg wrote:
| Sounds like GE is being taken to task by Vestas which is
| essentially a government backed private company.
| cinntaile wrote:
| Vestas is a public company and the Danish government isn't even
| in the top 10 shareholders...
|
| https://m.marketscreener.com/quote/stock/VESTAS-WIND-SYSTEMS...
| japanuspus wrote:
| As posted elsewhere, the Danish government has almost no
| financial stake in Vestas.
|
| If they did want to make Vestas their champion, they could make
| Orsted, a global leader in offshore wind in which the
| government has a majority stake, buy Vestas turbines. As it is,
| Orsted has historically only bought from Siemens and GE.
|
| In reality, Vestas is based and rooted in Jutland "far" from
| the capitol.
| bilbo0s wrote:
| Same thing happened in solar, so I'm not entirely sure why
| anyone is surprised by this?
|
| You can't compete against a nation state. Best you can do is
| have nation states agree to let you in on the action.
| boringg wrote:
| Absolutely. The US unfortunately was too politically
| pigheaded to build manufacturing for solar and wind and
| continue to pay for it. Go thank your local GOP rep and
| global warming conspiracy theorist for handing out those jobs
| offshore.
| jdhn wrote:
| The US shouldn't be subsidizing those jobs. What should be
| happening is that tariffs should be slapped on companies
| like Vestas that are basically government backed companies
| in order to even the playing field.
| missedthecue wrote:
| Why? If the Danish taxpayer is going to subsidize my
| country's wind infrastructure, why should I stop them?
| cinntaile wrote:
| Vestas is not a government backed company, see my other
| comment.
| boringg wrote:
| Go look at public policy in denmark to support vestas.
| cinntaile wrote:
| If there is public policy support, it needs to exist for
| all manufacturers. Otherwise it's not legal in the EU.
| pstuart wrote:
| It's heartbreaking that alternative energy has been so
| horribly politicized -- we _all_ win with its success.
| vondur wrote:
| The Danish government I assume?
| s900mhz wrote:
| I was one of the 20%, fun times. (Crap I accidentally double
| posted this)
| s900mhz wrote:
| I was one of the 20%, fun times!
| Gibbon1 wrote:
| The MBA cargo cult managers appear to have collectively decided
| to lay of 20% of the US workforce.
| sveme wrote:
| When did GE fuck up so royally? They seemed to be cutting edge in
| all their sub-parts, and now they are subpar everywhere. Did the
| MBAs take over?
| ortusdux wrote:
| I know several companies that flat-out refuse to sell
| components to them. Last I heard, their standard payment terms
| were net 90, and the word was that they would often overshoot
| this by another 90 days with smaller businesses. Not getting
| paid for half a year could easily bankrupt a small company.
| W-Stool wrote:
| IBM operated the same way back in the day (late 90's). I had
| a very modest ISV that sold a $5K custom device driver to IBM
| and it took me nearly a year to get paid. Everything was
| outsourced - even the accounts payable department.
|
| 20 years later in another life I did business with IBM as an
| enterprise customer. Same complete shitshow. Never again ...
| a2tech wrote:
| I also work with companies that won't sell to GE (since the
| late 80s/early 90s) because of 1) ridiculous JIT bs with
| parts 2) extreme hoops to go through to get paid 3) just
| endless rigamarole at every step with them. It got so bad
| they switched to selling to Rolls Royce instead because it
| was easier (and if you know about working with Rolls..this
| should tell you how bad GE was)
| SoftTalker wrote:
| Turbine engine parts, I assume?
| a2tech wrote:
| Yup, and aircraft engine parts
| bunabhucan wrote:
| I negotiated GE from net-75 to net-30 (what our other clients
| paid us) and got so much hate for it.
| neilpanchal wrote:
| I interned at the GE Wind division in Greenville, South
| Carolina. It's under GE Energy, and it was a complete and utter
| disaster.
|
| This was around 2005 and the entire GE Wind division was
| recently acquired from the Enron meltdown. Part of my job was
| to sort through a bunch of Enron manuals that had water damage
| sitting in the Tehachapi desert for 3 years in a warehouse.
| Surprisingly, the work done at Enron was quite good and
| bluebooks were really well done. They had already worked on a
| 5MW version of the turbine and had plans for 8MW. I'd say a
| third of it was water damaged and impossible to read. But, GE's
| management was a trainwreck happenning in slow motion beyond
| that. I worked a little bit with their Bangalore team that was
| working on wind turbine conceptual design framework.
| Essentially, GE's internal simulation tool for determining a
| whole bunch of design envelopes. There was little coordination
| between the US and Bangalore software team, often stepping on
| each other's toes. This program ended six months later after my
| internship. Basically, GE's wind turbine division at the time
| was Enron's zombie dressed up with nice clothes and trying to
| stand straight. Idk if things improved after that. I hated that
| internship so much, part of which was sifting through nasty
| boxes of molded design docs and then scanning them on a xerox
| machine.
| gvb wrote:
| "[The fall of GE] arguably begins with the arrival of the
| legendary Jack Welch as CEO in 1981."
|
| Ref: "The fall of GE" https://theweek.com/articles/761357/fall-
| ge (2018)
| twoodfin wrote:
| What's a comparable example of an already huge, industry-
| spanning conglomerate American corporation of 1981 that's
| done better than GE over the past 40 years? IBM is probably
| the best "successful" comparison, but they were never as
| diverse as '80's GE.
| dragontamer wrote:
| Berkshire Hathaway
| twoodfin wrote:
| That's a good one, but Berkshire had earnings of $40M in
| 1981[1]. I couldn't do better than the 1980 numbers for
| IBM ($3.5B)[2] and GE ($1.5B)[3] but safe to say in that
| era they dwarfed BH.
|
| My point is that it would have been extremely difficult
| for any giant conglomerate adapted to the business
| environment of 1981 to transition successfully to the
| business environment of 2021 without changing nigh
| unrecognizably.
|
| [1] https://www.berkshirehathaway.com/letters/1981.html
|
| [2] https://www.upi.com/Archives/1981/01/16/IBM-reports-
| sharply-...
|
| [3] https://www.nytimes.com/1981/01/23/business/ge-had-
| small-gai...
| ncmncm wrote:
| General Motors became a finance company that sold cars on
| the side.
| Gibbon1 wrote:
| My distilled belief is the finance guys managed to regain
| control of things from labor and manufacturing in the
| early 70's. After 1980 came the complete financialization
| of the American economy. Instead producing goods,
| services and jobs companies were pushed to create
| 'paper'.
|
| That's why GE and GM both let the finance part of the
| business wag the dog.
| W-Stool wrote:
| It is amazing how vertically integrated GM used to be -
| for a vehicle they made just about everything except the
| windshields, the paint, and the tires. They also made
| city buses, diesel locomotives, fractional HP electric
| motors, earth moving equipment, consumer kitchen
| products, and sold insurance. They even had their own
| university that awarded bachelors and masters degrees.
| All of that is long gone now.
| downut wrote:
| Also nuclear reactors and the uranium fuel rod assemblies
| those required.
| sidewndr46 wrote:
| Rockwell peaked at a similar time frame & then exploded
| into a 1000 tiny pieces:
|
| https://en.wikipedia.org/wiki/Rockwell_International#Apex_a
| n...
|
| Some are in fact successful companies to this day.
| buscoquadnary wrote:
| Yes that is exactly what happened Welch came in started pushing
| the MBA way of doing things, pushed it throughout the entire
| industry, talked a big game. Tons of MBA programs were focused
| around the "GE Way" etc. It was when the Peter Principle,
| people are promoted to their level of incompetence, to the
| Dilbert Principle, idiots are promoted directly to keep them
| out of the productive flow.
|
| The MBA ruined many things, it was scientific management
| brought back with a catchy name. Not creative enough to be in
| the artists? Lacking the intellectual discipline to become a
| real process engineer? It's okay you can become an MBA, learn
| no real skills, no real information and feel superior because
| then you can lord yourself over the serfs that decided to go
| into the silly practice of actually providing goods and
| services, when you can "manage" the people that actually
| contribute.
|
| Note this shouldn't be taken as a tirade against management,
| there are good leaders out there that do make things better for
| those they lead, but my point is that an MBA is totally
| independent variable to whether or not someone will be a good
| manager. The problem is that an MBA basically trains people to
| see their work/world as a video game where they play with
| spreadsheets, choose the right dialogue options in the tree,
| and assign your workers to specific tasks, and then when the
| reality doesn't conform everything hits the fan.
| bumby wrote:
| Out of curiosity, how would you define the role of a "real
| process engineer" and how is it fundamentally different?
| ETHisso2017 wrote:
| > MBA basically trains people to see their work/world as a
| video game where they play with spreadsheets, choose the
| right dialogue options in the tree, and assign your workers
| to specific tasks, and then when the reality doesn't conform
| everything hits the fan
|
| Accurate except the last part - when reality doesn't conform
| you come up with a 'transition plan' that involves you
| finding another group to run over a 3 month grace period
| while all the workers scramble with much less time than that
| JumpCrisscross wrote:
| > _pushing the MBA way of doing things_
|
| This is a bad, if commonly-made, attribution [1].
|
| [1] https://news.ycombinator.com/item?id=33111247
| randomdata wrote:
| I'll leave you to decide on the veracity of the claim, but
| he is suggesting that Welch _invented_ the "MBA way of
| doing things", something that eventually made its way into
| MBA programs thanks to Welch pioneering it. So him being a
| chemical engineer by training isn't at odds with what is
| being suggested. After all, you can't go to school to learn
| about what you created yourself.
| N19PEDL2 wrote:
| In other areas GE is not doing so badly: for example, it will
| be the engine supplier for the joint European UAV Eurodrone.
| [0]
|
| [0] https://www.defensenews.com/global/europe/2022/03/25/us-
| owne...
| prpl wrote:
| GE is so big and diverse that the laws of thermodynamics
| apply. Some parts have local minima and others maxima, the
| entire company trending towards entropy, and no Maxwells
| demon in sight.
| pipeline_peak wrote:
| When foreign electronic companies came in, same goes for RCA.
| hannob wrote:
| One thing to think about when reading news like this (which is
| something I learned through the first solar boom): While
| counterintuitive, it can at the same time be true that a
| technology is booming and companies building that technology are
| struggling.
|
| It's not that surprising once you think about it: Booming
| technologies means more companies enter the market. Some will be
| able to produce cheaper or better products than what's already
| there. If the old ones can't adapt they'll struggle.
| ncmncm wrote:
| Offshore wind is turning out to be a lot easier to sell.
|
| Unfortunately, the skills involved in deploying on land don't
| transfer very easily to sea work. Doing anything at sea is a
| specialty of its own. So, people with long sea experience will
| learn to put up wind turbines.
| MonkeyMalarky wrote:
| I read somewhere that companies who build platforms for oil
| rigs were getting into it since they already have the
| necessary expertise.
| adrianmonk wrote:
| Disruption creates winners and losers.
| gen220 wrote:
| Warren Buffet has some quote on capital intensive industries
| like you say.
|
| "The worst sort of business is one that grows rapidly, requires
| significant capital to engender the growth, and then earns
| little or no money. Think airlines. Here a durable competitive
| advantage has proven elusive ever since the days of the Wright
| Brothers. Indeed, if a farsighted capitalist had been present
| at Kitty Hawk, he would have done his successors a huge favor
| by shooting Orville down." [1]
|
| The last sentence is a sarcastic quip, for those who aren't
| familiar with his personality.
|
| [1]: warning, pdf link:
| https://www.berkshirehathaway.com/letters/2007ltr.pdf
| didericis wrote:
| That quip also acts as a healthy reminder that money is a
| tool, not an end. At the end of the day what matters is
| building a world that works and enables us to live meaningful
| lives. Money in a world where things don't work and don't
| enable us to use our time in meaningful ways means nothing.
| dxbydt wrote:
| I had to take 1 semester of Accountancy. The problem sets
| were like - "Acme Corp had revenue of 23,000,000$, profit
| of 2,000,000$, cost of materials 5,000,000,$ cost of labor
| 12,000,000$, cost of inventory...."
|
| Ultimately the problem boiled down to plain arithmetic.
| Just addition, subtraction. Hard problems involved
| multiplication.
|
| After like the tenth problem I lost my patience & raised my
| hand - why don't you just do these problems with small
| numbers ? Like 23-(5+12+4) = 2 ? Why are you making us do
| 23,000,000 - (5,000,000 + 12,000,000 + 4,000,000) =
| 2,000,000 ?
|
| The Professor said - Accountancy is arithmetic. With Big
| numbers. That's money for you.
| robertlagrant wrote:
| Absolutely - it's just an abstraction layer over the idea
| of exchange. If there's nothing to exchange, there's no
| need for money!
| kjkjadksj wrote:
| I think thats starting to tip. I fly spirit now, because is
| usually a couple hundred cheaper than delta et al and offers
| me the same exact service short of the 30 cent biscuit and 70
| cent can of coke given out on the delta flight.
| reducesuffering wrote:
| How is it starting to tip? Spirit Airlines stock is down
| 40% the last 5 years while the overall US market is up 40%.
| beambot wrote:
| How does any of that make Spirit a good business?
|
| Lots of companies provide valuable services, yet are crappy
| businesses from a FCF standpoint.
| opportune wrote:
| That is actually kind of Buffets point. Airlines are mostly
| undifferentiated businesses selling a commodity service,
| which creates a race to the bottom with low margins. In
| combination with being capital intensive, that makes it
| hard to turn a profit.
|
| You picking a cheaper airline with worse margins does not
| mean that airlines are a good business
| gen220 wrote:
| It's true that Spirit has competed well recently.
|
| Spirit (and other airlines) innovated and temporarily
| enjoyed a large market share of a second modality of
| commercial flight (very low budget travel). But it isn't
| (and wasn't, if you compare their operating margin over
| time [1]) a durable advantage.
|
| The reason is there's very little preventing you and I from
| starting Soul Airlines, and copy-pasting the Spirit
| playbook. Many airlines have, and more will. And this
| drives their prices down, which is great for you but not
| for long-term Spirit investors.
|
| At the end of the business cycle, the logical limit of
| their operating margin has proven to be functionally
| indistinguishable from Delta's.
|
| [1]: https://www.macrotrends.net/stocks/stock-
| comparison?s=operat...
| giantrobot wrote:
| I wish an airline would copy and paste the Ted playbook.
| Every seat was basically business class (on the flights I
| took) and you had the open seating model of Southwest. I
| only flew on a couple Ted flights and I don't know if my
| experience was standard but those were comfortable
| flights.
| gen220 wrote:
| My guess is that it was less consistently profitable than
| a more typical cabin arrangement.
|
| The reality is it's harder to _fully_ book a plane like
| the one you describe, than one with a distribution of
| seats that more closely resembles the distribution of the
| commercial airline customer population, especially when
| you consider how to pass on the cost of spiky jet fuel to
| the people in the cabin.
|
| On a plan with 8 business class seats, you can pass on
| most of that price to those 8, and you'll still fill the
| rest of the cabin and make money on the flight. With
| "only" 30 business class seats, it's a different story.
| Missing 6 seats might cause you to lose money.
|
| Wikipedia says Ted folded in 2008, amid a spike in fuel
| prices.
| snake_doc wrote:
| I don't think he's particularly concerned with capital. It's
| the lack of competitive advantage that is key. Insurance (the
| classic financial services industry that is Buffet's life
| blood) is one of the most capital intensive industries.
|
| Airlines lack substantial economies of scale, customer
| captivity, captive supply, or regulatory protections. The
| airline industry is a textbook case of an industry with no
| durable competitive advantages, thus the only performance
| factor is operational efficiency.
|
| Insurance on the other hand, there are substantial economies
| of scale (large fixed costs and also larger insurance
| companies are more diversified thus less costly/risky) and
| high customer captivity (high switching cost, high search
| cost).
| gen220 wrote:
| You're right! I was lazy with my words, it's definitely the
| durability that he's concerned with. The word durable, from
| the quote, is even emphasized in the original text.
| nradov wrote:
| Airlines have huge economies of scale due to network
| effects. Most customers will only buy a ticket if they can
| reach their final destination on a single airline with only
| one (or at most two) transfers. Code share agreements with
| partner airlines only partly mitigate this.
|
| The other major factor which prevents airlines from ever
| sustaining high profits is pilot unions. The pilots will
| demand most of the extra profits, and usually get it
| because a strike instantly shuts down the entire airline.
| Spooky23 wrote:
| Pilot unions have gotten the shit kicked out of them for
| years. 1970 wants its argument back.
|
| Tickets are fungible and people will make insane choices
| to save a dollar. The constrained resource is gates. The
| network effects that make big airlines viable are
| expensive, so without regulation there's always upstarts
| who drive the price as low as possible. That's why
| Emirates is fancy.
|
| If you live near NYC, there is an airport in Newburg that
| attracts weird financial engineering airlines that
| leverage leases to fly international cheaply. When I saw
| Hamilton, I flew Norwegian airlines from NY to London for
| $24. The long term parking cost more.
|
| It's an industry where the low barrier to entry ensures
| that the industry as a whole is barely profitable.
| gen220 wrote:
| Economies of Scale and Network Effects are distinct
| business powers.
|
| "Network Effects" means the Nth person doing business
| with the company generates more _value_ for the business
| 's service to everyone else, all else equal. I don't
| think airlines have network effects. There isn't much
| benefit to flying a highly-trafficked airline vs a lower-
| trafficked airline, provided they have the same routes.
| (If anything, this might be marginally inversely
| correlated? Small airlines seem to have a better
| experience than the big ones)
|
| "Economies of Scale" means that cost of goods sold
| becomes a lower percentage of revenue as revenue grows.
| This doesn't hold true for airlines, because jet fuel &
| taxes thereon, and leasing gate space make up the biggest
| fixed costs IIRC. Bigger airlines don't have a lot of
| negotiating edge vs small ones, here. Plus, big airlines
| have an exponential logistical problem to solve, which is
| costlier to solve "at scale". Thus, profit scales
| _basically_ linearly (some might argue sub-linearly) with
| revenue.
|
| There are indeed regional economies of scale for those
| airlines that invest in monopolizing growing transit
| hubs. Virgin Airlines and Southwest built their
| businesses on them, and are well-studied examples. But
| they are not durable over a long enough time horizon, and
| don't "scale" up to bigger footprints.
|
| Airlines "own" far too little of their costs, and startup
| cost is far too low, for them to be durable _and_ large
| business.
|
| The dynamic is terrible for value investors like BRK, but
| arguably quite great for consumers (fliers). And not too
| shabby for early-stage investors, either.
| snake_doc wrote:
| Having a higher route coverage is a function of size
| absolutely. However, it is definitely not a significant
| competitive advantage. Economies of scale is applicable
| in absolute and relative terms.
|
| Airline A can have 100% coverage everywhere in the world
| and be the largest airline. But if Airline B enters a
| specific route, there is no advantage to a customer
| whether they ride with A or B for that specific route.
| This is why there are so many entrants into the industry.
|
| The biggest factor to the lack of durable profits in the
| airline industry isn't labor or unions. It's the ease of
| entry into the market which puts tremendous pressure on
| price. There are no substantial barriers to entry, prices
| go down until profits are close to zero. So in classical
| value based investment lingo, it is an industry with no
| competitive advantages.
|
| The airlines industry in aggregate has never had a ROIC
| greater than its cost of capital over the long term (>1
| yr) for the lifetime of the industry.
| jacobr1 wrote:
| There were attempts to introduce artificial scarcity with
| loyalty programs. I used to be a more frequent flyer and
| still fly enough that I will pay a premium (up to a
| point) to get the benefits - upgrades and free-personal
| travel. Locking in business-traveler loyalty has long
| been a key to profitability in airlines.
| eldaisfish wrote:
| this does not translate well to an industry like wind energy
| where there are multiple moving parts, literally and
| metaphorically.
|
| the solar industry is literally zero moving parts. Panels and
| inverters are off-the-shelf commodities that are in a race to
| the bottom for price. this is further helped by the fact that
| they are largely interchangeable.
|
| Wind turbines do not function like this and they are
| complicated, dynamic systems requiring continuous monitoring
| and regular maintenance.
|
| The reality here is that the wind energy industry is and will
| continue to see a boom and order books are often full years
| into the future. Despite the headlines, onshore wind isn't
| going anywhere because there are many regions around the world
| where offshore wind does not work well.
|
| Offshore wind is being hyped up by Europe - coincidentally, a
| region with relatively shallow seas and limited land area.
| Despite the boom, there are not that many manufacturers of wind
| turbines precisely because it is a capital intensive industry.
| This is not good news.
| ABeeSea wrote:
| Also growth is hard to manage. And GE power has multiple
| business lines ( nuclear, hydrogen, off-shore wind) that might
| be better investments and higher margins than onshore wind.
| boringg wrote:
| I would say in climate tech it's a bit different. Yes companies
| can be suffering but typically for any of these energy
| technology companies they have significant manufacturing costs
| and long periods in which they have to deploy that capital to
| physically manufacture goods. It isn't necessarily the
| competition that sinks the companies its the market structure
| and timing.
|
| In the case of solar what happened was that the Chinese
| government underwrote Chinese manufacturers who produced
| significant volumes of solar panels which they dumped on the
| global market for incredibly cheap prices which put pressure on
| all the other global manufactures and consolidated the market.
| That said a lot of the Chinese manufacturers also went bankrupt
| as they undercut each other on prices to fill out the
| manufacturer queue.
|
| Also in energy tech you don't have infinite upside like
| technology -- as you deploy hard capital you have a finite
| range that you can get returns on. In the electricity markets
| you typically have to build technology and sell it for cheaper
| than what is currently available (i.e. project finance your
| project on a PPA < market rates). Already a fundamentally
| difficult structure to do well in - add in regulatory slowdown,
| political mandates, utilities as your clients (slow lead
| times).
| Proven wrote:
| peppertree wrote:
| Jack Welch destroyed the company and wrote a book to brag about
| it.
| infamouscow wrote:
| Jack Welch is evil incarnate. He ought to be universally
| condemned for moral bankruptcy.
| mc32 wrote:
| Worse than Al "Chainsaw" Dunlap? I think it's neck and neck.
| 7speter wrote:
| Did Al Dunlap leave a massive gap in tons of pension funds?
| javajosh wrote:
| Jack Welch got very rich and maintains a great reputation as a
| business leader despite destroying the company, and wrote a
| book to brag about it. "Getting away with it" is a key part of
| a juvenile power fantasy that motivates a lot of people, and at
| least one political party.
| travisporter wrote:
| Oh man really? I liked this guy so much I got a book signed by
| him in early 2000s. Where can I read more
| toomuchtodo wrote:
| https://globalpi.org/research/how-jack-welch-destroyed-
| sloan...
|
| https://www.ft.com/content/3f1ac0e6-f204-478d-8b64-54a699a12.
| ..
|
| https://www.npr.org/2022/06/01/1101505691/short-term-
| profits...
|
| https://www.axios.com/2022/05/31/jack-welchs-questionable-
| le...
|
| https://www.simonandschuster.com/books/The-Man-Who-Broke-
| Cap...
| thesausageking wrote:
| tl;dr - He turned GE into a financial services company,
| destroyed the culture of engineering that had built it, and
| bumped up their stock price via financial engineering. After
| he left, it's been a slow, painful trip downwards.
|
| Oh, and he fought hard against the EPA and scientists who
| said PCBs had bad health consequences so that GE could
| continue dumping them into the Hudson river and not have to
| pay for the cleanup until 30 years later (when he was long
| since retired).
| devchix wrote:
| Old boss golfed with him. Suddenly everyone was a 6-Sigma
| blackbelt, or assigned on a 6-Sigma track, even outside of
| manufacturing. That lasted like two whole years. Bad times.
| burkaman wrote:
| You can always check his Wikipedia page, where the
| "Criticism" section is longer than the "CEO" section.
| a2tech wrote:
| Turns out that if you hollow out a giant company you can turn
| out huge profits and it takes awhile for the corpse to fall.
| jandrese wrote:
| See also: private equity firms that specialize in finding a
| business that is currently struggling for one reason or
| another so they can buy it out and siphon off all of the
| equity and jump ship before the regular creditors catch up.
| Lots of safe money to be made by dismantling the work of
| generations.
| Analemma_ wrote:
| It boggles my mind that in MBA circles Welch is still
| considered "one of the greats". He took an innovative company
| and destroyed it with finance shenanigans. In a properly-
| functioning society he'd have been tarred and feathered, and
| business schools would use his name as a warning example of
| what not to do.
| DebtDeflation wrote:
| >He took an innovative company and destroyed it with finance
| shenanigans.
|
| How many times have we seen this exact thing play out?
|
| Xerox, Kodak, IBM, HP, etc.
|
| Some of it is due to technological change, but even that
| isn't necessarily the problem but rather the company's
| response to it (failing to invest, focusing on financial
| engineering rather than innovation, asset stripping,
| enriching executives at the expense of everyone else, etc.)
| is.
| linuxlizard wrote:
| Boeing.
| jimt1234 wrote:
| I really think the story of Percy Miller
| (https://en.wikipedia.org/wiki/Master_P) should be taught in
| business schools. Dude started out as a street-level drug
| dealer, and ended up becoming one of the most successful
| recording industry execs ever. He once paid Michael Jackson's
| lawyer $25K just to have lunch with him, so he could learn.
| He's not without controversy, but honestly, I'd rather learn
| about a true rags-to-riches story than a story about a slash-
| and-burn corporate tycoon.
| 7speter wrote:
| Why not both?
| masklinn wrote:
| > It boggles my mind that in MBA circles Welch is still
| considered "one of the greats".
|
| Why? It's the MBA dream to make out like a bandit and leave a
| trail of despair and destruction in your trail: any joy left
| over is value you failed to extract.
| ijidak wrote:
| > any joy left over is value you failed to extract
|
| One of the greatest lines ever
| aprdm wrote:
| I worked in a company that got bought by GE... was incredible how
| much waste and odd decisions were made. Felt like layers and
| layers of bureaucracy, and that their main reason for buying us
| was because they had billions offshore and didn't want to pay
| taxes to bring it back to USA.
|
| My faith in anything they do is very low.
| [deleted]
| SevenNation wrote:
| > Meanwhile, General Electric is in the process of splitting into
| three publicly traded companies, focused on health care,
| aerospace and energy.
|
| For some context, GE is kind of riches-to-rags story. Check out
| this chart of the share price:
|
| https://www.tradingview.com/chart/?symbol=NYSE%3AGE
|
| Here's a company whose stock is trading at 1994 levels. It never
| recovered from the "dot-com" crash of 2001. The dividend yield is
| nowhere close to a US treasury at any maturity. It's losing money
| left and right. A good chunk of that was the pivot, under Jack
| Welch's leadership, from actually making stuff into financial
| services, shedding hundreds of thousands of jobs along the way.
| GE was therefore well-placed for full-impact during the GFC.
| kqr2 wrote:
| There was a recent book about Jack Welch : The Man Who Broke
| Capitalism: How Jack Welch Gutted the Heartland and Crushed the
| Soul of Corporate America--and How to Undo His Legacy
|
| https://www.goodreads.com/book/show/59366216-the-man-who-bro...
| EvanAnderson wrote:
| One of my favorite radio shows / podcasts (Fresh Air)
| interviewed the author of "The Man Who Broke Capitalism" back
| in June: https://www.npr.org/2022/05/31/1102165413/did-jack-
| welch-bre...
| geodel wrote:
| Thank you. I will not miss to read this one. Last year I read
| https://www.gatesnotes.com/Books/Lights-Out
| geodel wrote:
| So basically _Six Sigma_ will now be split into _3 Two Sigmas_
| tootie wrote:
| Factoid: Of the ten largest companies in America before the
| Great Depression, only GE was still in business after the
| Depression.
| mdorazio wrote:
| What gets me is how Jack Welch was held up as an amazing
| businessman and model for corporate flexibility for years while
| his changes utterly destroyed GE's future for short-term gains.
| I'd argue the same thing about the Clinton administration and
| Greenspan specifically. There's got to be a better mechanism to
| force companies and countries to focus on long-term rather than
| short-term improvements.
| hn_throwaway_99 wrote:
| > I'd argue the same thing about the Clinton administration
| and Greenspan specifically.
|
| I'm curious, what are the things that happened during the
| Clinton administration that you think were short-term gains
| at the expense of long-term improvements? I've always felt
| that many of the _fiscal_ policies of Clinton _were_ in favor
| of long-term stability (e.g. specifically his tax policies
| and balancing the budget).
|
| Now, with _monetary_ policy and Greenspan specifically, I
| 100% agree that the "Greenspan put" was absolutely a
| disaster for long-term stability, but Greenspan was in office
| from 1987 - 2006 (originally nominated by Reagan), so I see
| his choices as pretty orthogonal to whoever was president at
| the time.
| myvoiceismypass wrote:
| Some people pin the repeal of Glass-Steagall (99) as a
| source of what happened in 08.
| nyokodo wrote:
| > I'm curious, what are the things that happened during the
| Clinton administration that you think were short-term gains
| at the expense of long-term improvements?
|
| The dot com bubble forming and then popping is a notable
| one, Enron's fraudulent ascent is another.
| hn_throwaway_99 wrote:
| > The dot com bubble forming and then popping is a
| notable one, Enron's fraudulent ascent is another.
|
| While I agree with this, I interpreted the parent comment
| as saying there was something specific about the Clinton
| administration's _policies_ that led to short term
| thinking. New technology boom and busts have been going
| on since the dawn of the Industrial Revolution (just look
| at early railroads and auto companies); the dot com
| bubble had nothing specifically to do with Clinton.
| Similarly, WTF did Enron have to do with the Clinton
| administration?
| geodel wrote:
| I'd say he was the original LinkedIn style _Thought Leader
| CEO_. His statements and performance was never critically
| analyzed by mainstream media when he was at top job for
| decades.
|
| In case anyone thinks it is past now. There is army of
| nincompoops who idolize him even today.
| dsr_ wrote:
| Stack ranking was his baby, too.
| jacobr1 wrote:
| > There's got to be a better mechanism to force companies
|
| I'd say the current version isn't terrible. Competition has
| lead to creative destruction. What would be real failure is
| GE sticking around with a bunch of moribund initiatives tying
| up skilled individuals and resources. Spinning out divisions
| is bad for GE shareholders (when the whole thing collapses)
| ... but I'm not sure it was actually bad for country, or for
| employees of new companies, or innovation in general.
|
| Things sorta worked they way they are supposed to. Bad
| management decisions over time results in bankrupt companies
| and their resources being auctioned off to more efficient
| corporations.
| toomuchtodo wrote:
| > There's got to be a better mechanism to force companies and
| countries to focus on long-term rather than short-term
| improvements.
|
| Unions with a board seat. Employee ownership. Shares in the
| hands of pragmatic investors who value long term over
| extraction and dumping the carcass on the next fool. People
| like Welch and characters like Gordon Gecko aren't heroes,
| they're cautionary tales, the Frank Underwoods (House of
| Cards) of finance and corporate management.
| Ligma123 wrote:
| How many hours per day does a wind tower have to be working and
| during which lifetime to be able to pay up for all that steel,
| copper, aluminum, and a couple of rare earth metals, with their
| prices currently rising, and to offset the environmental impact
| of collecting and producing such materials?
|
| Is their a study that answers these questions?
| pipeline_peak wrote:
| 1000 flocks of seagulls
|
| edit: HN not being able to take a joke as usual.
| EFreethought wrote:
| That joke was so bad, I ran. I ran so far away.
| burkaman wrote:
| I don't know about the financial aspect, but there are many
| studies on the lifecycle emissions of a wind turbine that you
| can look up. How much CO2 a turbine offsets depends a lot on
| the grid it's connected to, so there's no single number for
| "time-to-carbon-negative".
|
| However, remember that all power plants have materials, and
| wind has the second-lowest lifecycle emissions of all renewable
| technologies (https://www.nrel.gov/docs/fy21osti/80580.pdf),
| and of course is orders of magnitude better than non-
| renewables.
| danans wrote:
| > How many hours per day does a wind tower have to be working
|
| You are asking about the capacity factor, but that's governed
| more by when wind is available, and is about 40-50% for onshore
| wind.
|
| > and during which lifetime to be able to pay up
|
| This is the payback time and there are several to consider.
|
| For the embodied greenhouse gases of the wind turbine, about
| 5.3 months on average:
| https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6686152/
|
| > for all that steel, copper, aluminum, and a couple of rare
| earth metals
|
| About 6-7 years for the economic payback of capital costs (not
| counting the unaccounted avoided $ externalities of displaced
| fossil fuels).
|
| https://www.semprius.com/how-long-does-it-take-a-wind-turbin...
|
| Turbines last about 20 years.
| onlyrealcuzzo wrote:
| >> all that steel, copper, aluminum, and a couple of rare
| earth metals
|
| > About 6-7 years for the economic payback of capital costs
| (not counting the unaccounted avoided $ externalities of
| displaced fossil fuels).
|
| Presumably, all that steal and other material is still around
| in 20 years to be resold?
|
| How much do materials like these depreciate over 20 years?
| I'd guess in REAL terms not even 50%.
| danans wrote:
| > How much do materials like these depreciate over 20
| years? I'd guess in REAL terms not even 50%.
|
| Historically (since 1975) metals have _appreciated_ about
| 5x after inflation. Here is the 50 year price of scrap
| steel futures:
|
| https://www.investing.com/commodities/steel-scrap-
| historical...
|
| Stuff like composites for the turbine blades don't have a
| clear recycling/resale story yet, although there have be
| recent attempts to grind them down and turn them into other
| useful things:
|
| https://cen.acs.org/environment/recycling/companies-
| recycle-....
| jseutter wrote:
| The payback period has been dropping over time and is now under
| a year, in some cases well under a year. This depends on many
| things including where it is placed, size of the tower and time
| of year.
|
| Links to articles that reference the studies: -
| https://www.windpowerengineering.com/wind-turbine-carbon-pay...
| - https://www.newscientist.com/lastword/mg24332461-400-what-
| is...
|
| Wind can compete favorably with solar on price when you have
| the right conditions, which are both starting to beat
| traditional sources of power. It is hitting the point where you
| would select either wind or solar for price, when ignoring the
| desire for stable output.
|
| One current issue for wind power is what to do with the waste.
| The blades erode over time and need to be replaced, but mostly
| consists of fiberglass. It's not a huge problem, but each
| advancement in technology brings a new set of problems to be
| dealt with. Still, I'd rather deal with fiberglass than nuclear
| waste.
| briffle wrote:
| I would imagine much less time than a huge power plant, with
| its much more steel, copper, aluminum, concrete, etc. Don't
| forget the extraction process for coal, gas, or clear cutting
| entire valleys to make damns.
|
| You are comparing wind power to 'nothing'. You need to compare
| it to the alternatives.
| spywaregorilla wrote:
| Typically less than one year.
|
| > to pay up for all that steel, copper, aluminum, and a couple
| of rare earth metals,
|
| This sentence obfuscates that we're just talking about the
| dollar price here. Which is easily calculated
|
| > offset the environmental impact of collecting and producing
| such materials?
|
| Harder to decisively calculate but seems unlikely to be an
| actual issue; and trivial when compared to the opportunity cost
| of generating the same energy with fossil fuels.
| JanSt wrote:
| One year? With ROCE like that these things would be build
| everywhere and GE wouldn't downsize. Do you have a source for
| those numbers?
| anttisalmela wrote:
| Finland is having a boom, 70% increase in built wind power
| last year and 70% this year so far, and I checked the
| projects completed or completing this year. Most are Vestas
| and Nordex, some GE, and few outliers (Siemens, Eventus,
| Cypress one project each).
| spywaregorilla wrote:
| People are trying build green power like crazy. But it's
| not like you can just create a power generation facility
| anywhere you want. It has to hook into the transmission
| system. Because this is somewhat hard to organize, you need
| a certain scale of investment to do it. You also of course
| need an area with enough wind and demand for the energy.
| And land you can use.
|
| On shore wind is not as cost effective as solar or off
| shore wind either.
| JanSt wrote:
| While this is true I'd still like to see a source. Those
| numbers are hard to believe. I'd guess it would take at
| least 5 years to recover $-costs, which is still good
| spywaregorilla wrote:
| Apologies my answer was not well stated. The less than
| one year referred to the energy payback period. The
| capital recoup time with some back of the envelope math
| would probably be more like 10 years.
|
| No direct answers but you can back out some timelines
| from these https://www.energy.gov/sites/default/files/202
| 2-08/offshore_...
|
| https://weatherguardwind.com/how-much-does-wind-turbine-
| cost...
| tuatoru wrote:
| > With ROCE like that
|
| There are several businesses in the chain.
|
| The manufacturer (GE), and sometimes component
| manufacturers, the project lead/developer, financiers,
| insurers, the engineering lead, and sometimes specialists,
| the subcontractors who do the physical work. And probably
| more.
|
| It's not uncommon for some of these to be financially
| stressed at times in PV. Not the financiers, though.
|
| Jerome Guillet has a series on financing offshore wind[1].
| On-shore is along the same lines; I'm sure you can adjust.
|
| 1.https://wfo-global.org/financing-offshore-wind-part-1/
| pwinnski wrote:
| > GE wouldn't downsize.
|
| "GE's renewables segment is going to generate between $15
| billion and $16 billion in revenue this year, and onshore
| wind will make up the vast majority, roughly 70%."
|
| The returns are fine and growing, but GE is restructuring,
| and as the article points out, facing stiff competition and
| supply chain issues as well. Apparently they think losing
| 20% of their staff will help, and it doesn't necessarily
| have anything to do with how long it takes a new tower to
| become profitable.
| bluGill wrote:
| GE is not the only builder. Siemens for example is a big
| company that is building a lot of wind turbines.
| [deleted]
| Karellen wrote:
| How long does a coal or natural gas plant have to be operating
| to offset the environmental impact of collecting and producing
| its construction materials?
|
| ...
| tuatoru wrote:
| Not just the plant, in the case of fossil fuels' physical
| environmental impact.
|
| The wells, refining plant, and pipelines for gas, and the
| mines, railways, and ash disposal pits for coal. And the
| river intakes, detention ponds and so on needed for steam and
| cooling water.
| hannob wrote:
| If you are honestly interested in an answer (which I doubt)
| here are some studies linked for the carbon impact payback:
| https://www.newscientist.com/lastword/mg24332461-400-what-is...
|
| It's around 6 to 9 months.
| gsibble wrote:
| Oh, that's funny. Can't drill for oil, and wind energy isn't cost
| effective. What's next? Foot pedaled cars?
| throwayyy479087 wrote:
| You're going to be shocked that I peddled to work today, and
| saw a ton of deliveries done by people peddling!
| tuatoru wrote:
| * pedaled
| cm42 wrote:
| The operative word here is _onshore_ , for a variety of
| reasons, like the absence of road/tunnel/bridge permits,
| neighborhood Karen councils and local politicians, having to
| manage multiple lease arrangements, etc, etc.
|
| I read an industry article mid-COVID that claimed the biggest
| barrier to offshore right now was the lack of ships to install
| them - alleviated somewhat by the introduction of floating
| offshore rigs, like these:
|
| https://www.x1wind.com/
|
| So yeah, it's gotta be way cheaper to drop a couple of those in
| the ocean than truck towers out to middle-of-nowheresville or
| digging a foundation at the bottom of the ocean or whatever.
| tuatoru wrote:
| Thanks for that X1Wind tetrahedron link - I saw a similar one
| recently that used a truncated pyramid construction, with the
| blades rotating between the front and back pairs of legs.
|
| Interestingly with these size is not the be-all and end-all.
| If you make them so that they fit in the average port (towed
| by an average pair of tugs), the range of locations where
| they can be installed increases a lot. As does the
| availability of ships usable for the install.
| recursive wrote:
| > Foot pedaled cars?
|
| These have been around longer than fossil fuel powered ones.
| They're called bikes.
| juice_bus wrote:
| >GE is also in the process of splitting into three publicly
| traded companies, focused on health care, aerospace and energy.
|
| First I have heard of this!
| AtlasBarfed wrote:
| Wasn't GE long ago taken over by MBA sociopaths that cooked
| books with financial shenanigans, and deemphasized all the
| actual productivity and technology?
|
| IIRC then the house of cards collapsed right after Jack Welch
| and his management cult of personality retired?
|
| Likely this is a "last gasp" financial bloodsuck to sell off
| what remains of the legitimate parts of the company.
| JumpCrisscross wrote:
| > _by MBA sociopaths_
|
| The former VC / MBA who succeeded Jack Welch [1] is the one
| who discovered the cooked books and financial shenanigans.
| Welch was educated as a chemical engineer [2].
|
| [1] https://en.wikipedia.org/wiki/Jeff_Immelt
|
| [2] https://en.wikipedia.org/wiki/Jack_Welch#Early_life_and_e
| duc...
| jjoonathan wrote:
| Yes. The problem is not MBAs, the problem is management
| incentives and shareholder incentives.
| AtlasBarfed wrote:
| Because MBAs are morally and ethically rudderless
| sociopaths that only align to personal financial
| incentives and don't have any real integrity?
|
| Unless you're trying to say that there were NO MBAs under
| Jack Welch's management team and organization?
|
| MBAs are absolutely the problem.
| sct202 wrote:
| MBA programs just cargo cult whatever is appears to be
| working. They're like trend followers who just amplify
| whatever is already happening not trend setters.
| cebert wrote:
| There's a lot of negativity here about MBAs. Perhaps some
| of this is merited, but I think MBA programs can be
| beneficial and aren't as "cargo cult" as some commenters
| have suggested. I am a principal software engineer
| working on cloud projects, but decided to get a MBA in
| 2017. I learned a lot of valuable skills such as
| accounting, finance, negotiations, and HR that I had
| little to no exposure to in my undergraduate Computer
| Science program. Knowing how to read SEC filings and how
| to sell projects and ideas to executives has only helped
| me in my career. The MBA program I was in helped me get
| exposure to many business fundamentals. There's a lot of
| negativity, but if you look at many MBA programs, most of
| them focus on the fundamentals.
| [deleted]
| lostlogin wrote:
| Two wrongs make it right?
| ABeeSea wrote:
| The current CEO is doing a pretty good job, in my opinion.
| Has been very focused on fixing the debt situation and
| improving costs through process and manufacturing
| improvements rather than accounting non-sense. Comes off as
| very much a "manufacturing operations / kaizen" guy.
| 7speter wrote:
| Theyve also either sold off divisions or license their names to
| other companies. GE doesnt make appliances anymore, Haier makes
| the product and slaps a GE logo on it.
| Apocryphon wrote:
| > While demand for clean energy options is rising as energy
| shortages continue to wreak havoc, analysts say it's been
| difficult to make wind energy a cost-effective option. The
| recently passed Inflation Reduction Act does restore a tax credit
| for onshore wind, but some experts worry it came too late.
| spywaregorilla wrote:
| The cost effective struggle is largely against solar and off
| shore wind fwiw. Clean energy is booming.
| [deleted]
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