General Electric Research Paper

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General Electric is one of the largest corporations in the United States. Formed in 1892 from the merger of two U.S. electrical manufacturing companies, Edison General Electric Company and Thomson-Houston Electric Company, by 2006 General Electric had become a $163 billion corporation. General Electric today is a multinational diversified company operating in more than 100 countries in sectors as diverse as aviation and nuclear power, industrial and domestic electrical appliances, personal and industrial finance, and media and entertainment. Despite the level of diversification, its traditional electrical manufacturing activities linked to aviation and energy contributed almost 30 percent of sales in 2006 (General Electric 2006). General Electric continues to be one of the world’s largest producers of jet engines, supplying Boeing and Lockheed Martin, among others.

General Electric’s rise to dominance derived from the company’s ability to restrict market competition through cartelization in the newly expanding consumer markets of the Second Industrial Revolution, and its ability to gain access to large, secure government markets, especially those linked to electricity generation and military equipment. General Electric was at the forefront of the development of international cartels before World War II, instigating market sharing and price-fixing through the creation of “rings” regulated by the International Electrical Association (Barjot 1995). Despite challenges by U.S. antitrust authorities after World War II, international cooperation and market sharing continued (Mirow and Maurer 1982). In the area of military technology, General Electric developed extensive capabilities as a result of high U.S. government defense expenditure during the cold war, and it continues to benefit from the rises in defense expenditure by every government since Ronald Reagan’s; in 2005 its defense contracts amounted to $2.2 billion.

Large protected markets provided the backdrop for diversification into the financial and media sectors. Thus, in the areas of media and entertainment General Electric succeeded in creating large organizations capable of developing market power in entertainment and communication sectors, most notably in 2004 with the creation of NBC Universal, which combined NBC and Vivendi Universal to create a $43 billion media empire (CorpWatch 2006).

General Electric, along with other U.S. manufacturing multinationals, has utilized outsourcing and the establishment of maquila production systems along the U.S.–Mexican border as a mechanism for cost reduction. The company’s diversification into distribution and logistics through its Trailer Fleet Services division has been used to service U.S. companies in the linking of the maquila production centers to U.S. markets. The resultant low-wage and poor labor conditions within the maquila system of production and redundancies and reductions in living standards for U.S. workers has led to extensive criticism of the company from labor unions.

Bibliography:

  1. Barjot, Dominique. 1995. International Cartels Revisited, 1880–1980. Caen, France: Éditions-Diffusion du Lys.
  2. 2006. General Electric. http://www.corpwatch.org/article.php?list=type&type=16.
  3. General Electric. 2006. Invest and Deliver: GE Annual Report 2006. http://www.ge.com/ar2006/?c_id=ar06IR.
  4. Global Exchange. 2006. Sweatfree Campaigns. http://www.globalexchange.org/campaigns/sweatshops.
  5. Mirow, Kurt Rudolf, and Harry Maurer. 1982. Webs of Power: International Cartels and the World Economy. Boston: Houghton Mifflin.

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