- 18Oct
General Electric Co. on Monday announced significant new U.S. investment in its appliances division after spending much of 2008 trying to shed the flagging unit.
The conglomerate said GE Appliances & Lighting will add 500 U.S. jobs by 2014 and invest $432 million to design and manufacture efficient and environmentally friendly refrigerators.
Combined with a previous announcement late last year, the appliances division has unveiled plans for about 1,300 new U.S. jobs by 2014 and over $1 billion in investment since GE pulled the division from the sales block in late 2008 for lack of an acceptable offer. A backup plan to spin off the unit was hobbled by the recession and credit crunch.
GE executives have said several times since the aborted divestiture efforts that it would keep and grow the unit. Jim Campbell, president of GE Appliances & Lighting, said Monday that the new investment plans are in keeping with the strategy.
"This is a big commitment on the part of GE to really transform the business and put us in a much different place over the next couple of years," he said.
The appliances sector was hit hard by the economic downturn and has been slow to rebound. Industrywide sales slumped 4% in the third quarter, Campbell said, even though "a year ago we had hoped by this time we would see some recovery."
Still, he said the sector will inevitably tick up again as the economy slowly rebounds, with GE anticipating "modest growth" of 3% to 3.5% for appliance sales industrywide next year.
GE doesn't break out specific results for Campbell's division, although he said the unit was profitable in the third quarter and will be for the full year.
Under the unit's latest announcement, Campbell said GE will put in place refrigeration centers in Louisville, Ky.; Bloomington, Ind.; Decatur, Ala.; and Selmer, Tenn. The new refrigerators that GE plans to build will take into account anticipated standards for energy efficiency and incorporate so-called "smart-grid" technology.
GE's appliances division currently employs 9,590 people in the U.S. Combined, the division's hiring plans will bring the total to around 10,900 by 2014.
The company's investment plans were helped by what GE called "innovative wage agreements" with its unions designed to keep the new manufacturing effort globally competitive. Campbell said the new hires will earn about $13 a hour on average, with full benefits, compared to what would have been wages in the low to mid $20-an-hour range without successful union negotiations.
"Our U.S. plant can and will be competitive in the production of these products," Campbell said.
GE said it has received a total of about $78 million in various local government, state and federal incentives to make the investments.
