The General Electric Company plc

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The General Electric Company plc
GEC company logo
Fate Renamed Marconi plc
Successor Marconi plc
Founded 1886
Defunct 1999
Location Coventry, United Kingdom

The General Electric Company plc or GEC was a major UK company involved in consumer and defence electronics, communications and engineering. The company was renamed to Marconi plc in 1999. In 2005 Ericsson purchased the bulk of Marconi, the remaining businesses were renamed Telent plc.

It is not to be confused with the American conglomerate General Electric (GE).

The change to the name Marconi plc occurred on November 30, 1999 after GEC's defence arm Marconi Electronic Systems (MES) was demerged and sold to British Aerospace (BAe) for £7.7 billion to form BAE Systems.

Contents

[edit] History

GEC traces its origins to G.Binswanger and Company, an electrical goods wholesaler established in London during the 1880s by a German immigrant Gustav Binswanger (later Gustav Byng). Regarded as the year GEC was founded, 1886 saw Byng joined by a fellow immigrant, Hugo Hirst (later Lord Hirst), and the company changed its name to The General Electric Apparatus Company (G.Binswanger).

This small business found early success with its unorthodox method of supplying electrical components over the counter. Hugo Hirst was an entrepreneurial salesmen who foresaw the potential of electricity and was able to direct standardisation of an industry in its infancy. He travelled across Europe with an eye for the latest products and in 1887 the company published the first electrical catalogue of its kind. The following year the company acquired its first factory in Manchester where telephones, electric bells, ceiling roses and switches were manufactured.

[edit] General Electric Company Ltd

In 1889, the General Electric Company Ltd. was formed as a private limited company. The company was expanding rapidly, opening new branches and factories and trading in 'Everything Electrical', a phrase that was to become synonymous with GEC. In 1893, GEC decided to invest in lamp manufacture. The resulting company, (to become Osram in 1909), was to lead the way in lamp design and the burgeoning demand for electric lighting was to make GEC's fortune. In 1900, GEC was incorporated as a public limited company, The General Electric Company (1900) Ltd, (the '1900' was dropped three years later). In 1902, GEC's first purpose-built factory, the Witton Engineering Works was opened near Birmingham. This was later to become a factory for the manufacture of Automobiles.

With the death of Gustav Byng in 1910, Hugo Hirst became Chairman as well as Managing Director, a position he had assumed in 1906. Hirst's shrewd investment in lamp manufacture was proving extremely profitable and in 1909 Osram began production of the most successful tungsten filament lamps in the industry. Rapidly growing private and commercial use of electricity ensured buoyant demand and the company expanded both at home and overseas, with the establishment of agencies in Europe, Japan, Australia, South Africa and India and a substantial export trade to South America.

[edit] World Wars

The outbreak of World War I transformed GEC into a major player in the electrical industry with profits to match. The company was heavily involved in the war effort, with products such as radios, signalling lamps and arc-lamp carbons.

Between the wars, GEC expanded to become an international corporation and a national institution. The take-over of Fraser and Chalmers in 1918 took GEC into heavy engineering and consolidated their claim to supply 'Everything Electrical'.

During the 1920s, the company was heavily involved in the creation of the UK National Grid. The opening of the new purpose built company headquarters in Kingsway, London in 1921, and the pioneering industrial research laboratories at Wembley in 1923, were symbolic of the continuing expansion of both GEC and the electrical industry.

During World War II, GEC was a major supplier to the military of electrical and engineering products. Significant contributions to the war effort included the development of the cavity magnetron for radar at the University of Birmingham, advances in communications technology and the ongoing mass production of lamps and lighting equipment.

The post-war years witnessed a slow down in GEC's expansion. Following the death of Hugo Hirst in 1943, his son-in-law, Leslie Gamage, along with Harry Railing took over as joint Managing Directors. Despite the demand for electrical consumer goods and large investments in heavy engineering and nuclear power, profits began to fall for the first time in the face of increasing competition and internal disorganisation.

[edit] Expansion

In 1961, GEC took over Radio and Allied Industries, and with it emerged the new power behind GEC, Arnold Weinstock (later Lord Weinstock), who became Managing Director in 1963, moving the headquarters of the electrical giant from Kingsway to a modern building at 1 Stanhope Gate.

Weinstock embarked on a program which was to rationalise the whole of the UK electrical industry, but began with the interior rejuvenation of GEC. In a drive for efficiency, Weinstock made both cut-backs and implemented mergers injecting new growth into the company. GEC returned to profit and the financial markets' confidence was restored.

In the late 1960s, the electrical industry was revolutionised as GEC acquired Associated Electrical Industries (AEI) in 1967, which encompassed Metropolitan-Vickers, BTH, Edison Swan, Siemens Bros., Hotpoint and W.T. Henley.

In 1968, GEC merged with English Electric, incorporating Elliott Brothers, the Marconi Company, Ruston & Hornsby, Robert Stephenson and Hawthorns and the Vulcan Foundry, Willans & Robinson and Dick, Kerr & Co.

The company continued to expand, with the acquisition of Avery in 1979. By this time, GEC had become Britain's largest private employer. In 1984 GEC became one of the first 100 companies to enter the FTSE 100 Index, at which time it was ranked third behind British Petroleum and Shell Transport and Trading with a market capitalisation of £4.915 billion. In 1985 it acquired Yarrow shipbuilders.

The late 1980s witnessed some major mergers within the electrical industry, with the creation of GEC-Plessey Telecommunications (GPT) by GEC and Plessey in 1988. The following year GEC and Siemens AG formed a joint company, GEC Siemens plc, to takeover the Plessey Company. As part of the deal GEC took control of Plessey's avionics and naval systems businesses.

An equal investment by GEC and Compagnie Générale d'Electricité (CGE), formed the power generation and transport business, GEC-ALSTHOM in 1989.

The movement towards electronics and modern technology, particularly in the defence sector, marked a change in direction away from the domestic electrical goods market. GEC acquired of parts of Ferranti in 1990 and Vickers Shipbuilding and Engineering Ltd. (VSEL) in 1995. VSEL was willing to participate in a merger with a larger company to reduce its exposure to cycles in warship production, particularly following the "Options for Change" defence review following the end of the Cold War. Following GEC's purchase VSEL became Marconi Marine (VSEL).

Lord Weinstock retired as Managing Director in 1996.

In June 1998, GEC completed the $1.4bn acquisition of major American defence contractor Tracor, which became part of MES.

[edit] Marconi Electronic Systems sale

Since October 1998, reports had been linking British Aerospace (BAe) with the German aerospace group DASA. GEC was even seen as a potential partner in a three-way merger with BAe and DASA.

In December 1998, reports emerged that GEC was seeking a partner for MES, the value of which was greatly increased by the Tracor acquisition. Prospective partners included Thomson-CSF (by 1998 on the path to privatisation) and various American defence contractors (e.g. Lockheed Martin and TRW).

GEC had already been active in pursing consolidation in the defence business. In 1997 it made an ultimately unsuccessful proposal to the French government to privatise Thomson-CSF and merge it with MES.

However the prospect of a merger of UK companies soon became the most likely development. In mid January 1999, GEC and BAe confirmed they were holding talks and on January 19 it was announced that BAe was to acquire MES for £7.7bn ($12.75bn).

[edit] Transition to Marconi plc

While the deal was yet to be completed, GEC used much of prospective proceeds of the MES sale to acquire companies during 1999. This was part of a major realigment of the firm to become a radio, telecommunications, and internet equipment manufacturing company. GEC purchased Reltec for £1.3bn in March and FORE Systems for £2.8bn in April.

BAe completed its purchase of MES on November 30, 1999 to form BAE Systems.

GEC announced that it was to be renamed as Marconi plc.

[edit] Timeline

[edit] See also

[edit] Reference

Anatomy of a Merger - A History of GEC, AEI and English Electric, by Robert Jones and Oliver Marriott, Published by Jonathan Cape, 1970, ISBN 0-224-61872-5

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