Thursday, September 30, 2010
GE's Really Big, Bad Ideas
Why would General Electric abandon the incandescent light bulb? In 1890 Thomas Edison established General Electric after having achieved fame with it and other inventions. Not only will this iconic invention no longer be manufactured in the United States by next year, but the government has ruled that it cannot even be purchased here.
That is a level of stupidity that defines much of U.S. manufacturing and energy policy these days and explains why so many jobs have been out-sourced to other nations. It demonstrates what harm can be done by a government that has interfered so much in the industrial and financial marketplace that the nation totters on economic ruin.
It goes without saying that you don’t become the chief executive of GE without having demonstrated a lot of smarts and managerial ability, but a recent Wall Street Journal article, “GE Chief Slams U.S. on Energy” made me wonder if Jeff Immelt shares the same nation with me, if not the same planet.
Immelt is all about new sources of energy like wind and solar even though, combined, they produce about three percent of the electricity Americans use every day and, without government subsidies and other government-granted credits, they would barely exist. The reason is obvious. The wind does not blow all the time and the sun is often either behind clouds or it is night time.
In a speech to the Gridwise Global Forum on September 23, Immelt got a lot of facts backward. For example, he reportedly “praised China’s approach to energy and criticized what he called a stalled effort to revamp U.S. energy policy.”
China is building a new coal-fired plant almost weekly in order to ramp up its ability to compete internationally. It is no accident that the nations that use the most energy are also the most successful. It has been U.S. energy policy to slow the building of coal-fired plants even though the U.S. is estimated to have several hundred years of coal with which to supply their needs and ours.
Immelt worried that GE was facing tougher competition around the world selling “equipment to produce renewable (wind and solar) and nuclear energy. GE believes its rivals receive more help from their governments.”
He neglected to mention an effort in the U.S. Senate that would “impose a Renewable Electricity Standard (RES) that would force electric utilities to generate a large and increasing percentage of their power from wind and solar—rising to 15% by 2021”, according to Dr. S. Fred Singer of the Science & Environmental Policy Project.
The RES would give so-called renewable or “clean” energy producers an economic advantage that ignores the obvious. Coal, gas, and nuclear energy are cheaper and more plentiful. Consumers will see their energy bills soar if the RES becomes law.
Immelt noted that the electric grid system in America needs an upgrade and in this he is right. Left unsaid is that both solar and wind require heavy investment to transmit the energy generated, usually in places far from urban or suburban centers, to the grid. Also left unsaid is that most of the wind turbines and solar panels in use today in America are made in China.
Immelt was correct, too, in noting the failure to get behind the production of nuclear energy in the U.S. Most of the plants operating today were built in the 1970s and, for reasons I have never understood, a multi-billion dollar repository for nuclear waste, Yucca Mountain in Nevada, has been closed to use. Meanwhile, nations like India have embarked on an aggressive program to increase and integrate nuclear power for electricity production.
Jack Welch was famous for instilling new life and vitality into GE before his retirement and replacement by Jeff Immelt. In April, Businessweek magazine devoted its cover to a story, “Can GE Gets Its Juice Back? A company renowned for innovation and talent development has lost its way. Inside Jeff Immelt’s quest to find the light.”
GE’s earnings from continuing operations were described as “ho-hum”, having sunk 38% in 2009” and expected to stay flat this year. In an annual shareholder letter, Immelt spoke of a “decade from hell.” You won’t find many corporate leaders or financial analysts that have much good to say of GE these days.
And perhaps that might have something to do with GE’s failure to support the best, proven ways to generate electricity? Or to have failed to protect the American consumer from a government-imposed ban on incandescent light bulbs?
© Alan Caruba, 2010