General Electric Company plc

Not to be confused with the American company General Electric (GE).
General Electric Company plc
Public limited company
Industry Engineering
Fate Defence arm merged with BAe to form BAE Systems (1999)
GEC renamed Marconi plc (1999)
Successor BAE Systems
Marconi plc
Otis Elevator Company
Founded 1886
Defunct 1999
Headquarters Coventry, England
Key people
 Lord Weinstock (Managing Director)
Products Electronics

The General Electric Company or GEC was a major British-based industrial conglomerate, involved in consumer and defence electronics, communications and engineering. The company was once a constituent of the FT 30 and FTSE 100 Index.

In December 1999, GEC was renamed Marconi plc and became a telecommunications focused company; when its defence arm, Marconi Electronic Systems was amalgamated with British Aerospace to form BAE Systems.[1] The financial troubles that followed the burst of the dot-com bubble in 2000/2001, led to the May 2003 restructuring of Marconi plc to Marconi Corporation plc.[2]

In 2005, Ericsson bought the bulk of Marconi Corporation plc, along with its principal subsidiary, Marconi Communications. The remainder of the business was renamed Telent.

History

Early years (1886-89)

Sir Hugo Hirst, Bt., around 1930
Early switchboard equipment, circa 1888

GEC traces its origins to G. Binswanger and Company, an electrical goods wholesaler established in London in the 1880s by a German Jewish immigrant[3] Gustav Binswanger (later Gustav Byng).[4] Regarded as the year GEC was founded, 1886 saw a fellow immigrant, Hugo Hirst, join Byng, and the company changed its name to The General Electric Apparatus Company (G. Binswanger).[4]

This small business found early success with its unorthodox method of supplying electrical components over the counter. Hugo Hirst was an entrepreneurial salesman 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.[4] The following year the company acquired its first factory in Salford where telephones, electric bells, ceiling roses and switches were manufactured.[4]

Incorporation and expansion (1886-1914)

In 1889, the business was incorporated as a private company known as General Electric Company Ltd.[4] 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).[4] In 1902, GEC's first purpose-built factory, the Witton Engineering Works was opened near Birmingham.

With the death of Gustav Byng in 1910, Hugo Hirst became Chairman as well as Managing Director, a position he had assumed in 1906.[4] 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

World Wars and post WW2 (1914-60)

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, signal lamps and arc-lamp carbons (used in searchlights).[4]

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'. In that same year the electricity meter manufacturer Chamberlain and Hookham was also acquired.[5]

In 1917, GEC has operated the Express Lift Company in Northampton, England for their elevator division.[6]

In 1919, GEC merged its radio valve manufacturing interests with those of the Marconi Company to form the Marconi-Osram Valve Company.[7]

In the 1920s the company was heavily involved in the creation of the UK National Grid.[4] The opening of the new purpose built company headquarters in Kingsway, London in 1921, and the pioneering industrial research laboratories[8] at Wembley in 1923, were symbolic of the continuing expansion of both GEC and the electrical industry.[4]

In World War II GEC was a major supplier to the military of electrical and engineering products.[4] Significant contributions to the war effort included the development in 1940 of the cavity magnetron for radar,[4] by the scientists John Randall and Harry Boot, at the University of Birmingham, and advances in communications technology and the ongoing mass production of valves, 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.

Further expansion (1960-98)

In 1961, GEC merged with Sir Michael Sobell's Radio & Allied Industries Ltd.[4] and with it emerged the new power behind GEC, Sobell's son-in-law Arnold Weinstock (later Lord Weinstock), who became Managing Director in 1963,[4] moving the headquarters of the electrical giant from Kingsway (in Holborn, London), to a modern building at 1 Stanhope Gate (near Hyde Park Corner, in Mayfair, London).[4]

Weinstock embarked on a programme 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, British Thomson-Houston (BTH), Edison Swan, Elliott Brothers, Siemens Brothers & Co, Hotpoint, W.T. Henley, and Birlec.[4]

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.[2][4]

The Witton works remained one of the Company's biggest sites producing HV Switchgear, HV transformers, 'small' motors, mercury arc rectifiers and traction components until its gradual selling off by Weinstock in 1969. The site remains as a business park to this day.

The company continued to expand, with the acquisition of W & T Avery Ltd. in 1979.

In April 1981 GEC acquired Cincinnati Electronics (CE), in Cincinnati, Ohio, at the time owned by George J Mealey, President and Chairman of the Board. CE was a leader in military Radios and Infrared Technology, Space Electronics and other high security products, doing business throughout the world. Now owned by L-3 Communications-Cincinnati Electronics.

In 1981, GEC acquired more U.S. companies Mitel and Picker Corporation, an American manufacturer of medical imaging equipment.[9] It merged Picker with Cambridge Instruments, GEC Medical, and American Optical to form Picker International. GEC Medical was itself an amalgamation of Watson & Sons Ltd - formed in the early 20th Century in London and long a part of GEC, and A E Dean & Co of Croydon. In 1982, it introduced the first 1.0T Magnetic resonance imaging (MRI) unit. In 1998, it acquired the CT division of Elscint Ltd. In 1999 the company changed its name to Marconi Medical Systems. In 2001 Philips Electronics bought Marconi Medical Systems for $1.1 billion.[10]

GEC had become the United Kingdom's largest and most successful company and private employer, with about ¼M employees in 1983. 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 and a cash reserve of £5 billion. In 1985 it acquired Yarrow shipbuilders from British 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.[4] The following year GEC and Siemens formed a joint company, GEC Siemens plc, to take over the Plessey Company. As part of the deal GEC took control of Plessey's avionics and naval systems businesses.[4]

In 1989 GEC and Compagnie Générale d'Electricité (CGE) merged their power generation and transport business in a new joint venture, GEC-ALSTHOM.[4]

Otis Elevator Company acquired GEC's The Express Lift Company in 1996.[11]

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 the defence electronics division of Ferranti in 1990 and Vickers Shipbuilding and Engineering Ltd. (VSEL) in 1995.[12] 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 and was replaced by George Simpson who embarked on a spate of major U.S. mergers and acquisitions. In July 1997 GEC announced the result of a major review; the company would move away from its joint ventures and focus on moving toward "global leadership" in defence and aerospace (Marconi Electronic Systems - MES), industrial electronics (GEC Industrial Electronics) and communications (GEC Communications).[13]

Early in 1998 GEC announced the merger of its radar and avionics business with and Alenia Difesa to form Alenia Marconi Systems.[14] In February 1998, Marconi Instruments, the test equipment arm of GEC, was sold to IFR Systems.[15]

In June 1998, GEC completed the $1.4bn acquisition of major American defence contractor Tracor, which became part of MES.[16]

After the failure of most of its U.S. acquisitions, GEC began on the road to contraction until its ultimate demise. The cash mountain of £5 billion which Lord Weinstock had built up in the 1980s had all but disappeared through bad management.

Marconi Electronic Systems sale (1998-99)

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.[17]

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).[18]

GEC had already been active in pursuing 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.[19]

The prospect of a merger of UK companies soon became the most likely development. In mid January 1999, GEC and British Aerospace confirmed they were holding talks and on 19 January it was announced that British Aerospace was to acquire Marconi Electronic Systems for £7.7bn ($12.75bn).[20]

Marconi plc (1999-2003)

While the deal was yet to be completed, GEC used much of the prospective proceeds of the MES sale to buy companies in 1999. This was part of a major realignment of the firm to focus on the then-booming telecoms sector; and become a radio, telecommunications, and internet equipment manufacturing company.

Marconi plc bought two American equipment-makers - RELTEC Corporation (March 1999) for £1.3bn, FORE Systems (April 1999) for £2.8bn, to complement telecommunication business of its subsidiary - Marconi Communications.[21] Later in April 2000, it acquired Mobile Systems International for £391m. Also in 1999 GEC acquired Kvaerner's Govan shipyard.[22] These acquisitions took place at very high prices in the Dot-com bubble, and the heavy price tag took a heavy toll on Marconi following the “burst of the dot-com bubble” in 2000/2001.[23][24][25] In July 2001, Marconi plc suffered a 54% drop in its share price following suspension of trading of its shares, a profits warning and redundancies.

Marconi Corporation plc and breakup (2003-2005)

On 19 May 2003, Marconi plc underwent a major restructuring into Marconi Corporation plc - advised by Lazard and Morgan Stanley.[26][27] Marconi shareholders received 1 Marconi Corporation share for every 559 Marconi shares. In a debt-for-equity swap, the firm's creditors received 99.5% of the new company's shares.[26]

In 2005, the company failed to secure any part of BT's 21st Century Network (21CN) programme. Various bids were received for the business including one by Huawei Technologies with whom Marconi already had a joint venture.[28] The fact that Marconi Corporation plc received no major 21CN contract was a surprise to commentators, and sent the company's shares tumbling. An example of analysis before BT announced the winners of contracts is Dresdner Kleinwort Wasserstein's : "[Marconi is] so advanced with its products and so entrenched with BT Group PLC that its selection looks certain."[29]

Until the collapse of the Marconi group in 2005 and 2006, the company was a major supplier of Asynchronous Transfer Mode, Gigabit Ethernet and Internet Protocol products. The majority of Marconi Corporation's businesses (including Marconi Communications) were sold to Ericsson in 2005,[30] and the remainder renamed Telent plc. On 27 October 2006, the company folded voluntarily.[31]

See also

References

  1. ↑ "Funding Universe - History of Marconi plc". fundinguniverse.com. Retrieved 14 July 2012.
  2. ↑ 2.0 2.1 "History of GEC". Retrieved 12 July 2012.
  3. ↑ , Second Chance: Two Centuries of German-speaking Jews in the United Kingdom, edited by Werner Eugen Mosse, Julius Carlebach, Mohr Siebeck, 1991, p.362 (retrieved 20 December 2013 from Google Books)
  4. ↑ 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 "GEC History". IPD Group. Retrieved 5 June 2010.
  5. ↑ http://www.gracesguide.co.uk/Chamberlain_and_Hookham
  6. ↑ "Roots of the Company - The rise and fall of the GEC empire". Retrieved 3 July 2013.
  7. ↑ The Saga of Marconi-Osram Valve: A History of Valve-making by B. Vyse & G. Jessop ISBN 0-9539127-0-1
  8. ↑ Clayton, Robert; Algar, Joan (1989). The GEC Research Laboratories 1919-1984. Peter Peregrinus. ISBN 0-86341-146-0.
  9. ↑ Reuters (25 April 1987). "Medical Venture By Philips and GEC". New York Times. Retrieved 5 June 2010.
  10. ↑ "Philips: Where did it all begin?". Medical.philips.com. 16 September 2008. Retrieved 5 June 2010.
  11. ↑ "OTIS ELEVATOR AND GENERAL ELECTRIC COMPANY (GEC) REACH AGREEMENT ON PURCHASE OF EXPRESS LIFT COMPANY". 2 April 1996. Retrieved 25 April 2014.
  12. ↑ BAe asks shareholders about bid
  13. ↑ Leach, Andrew, "Strategic shake-up at GEC" 9 July 1997 The Scotsman'.' Retrieved 30 April 2008.
  14. ↑ GEC prepares to launch £5bn telecoms and defence strike
  15. ↑ GEC Sells Marconi Instruments - 6 February 1998
  16. ↑ "GEC of Britain agrees to buy Tracor". New York Times. 22 April 1998. Retrieved 5 June 2010.
  17. ↑ "GEC spoils DASA / BAe party". BBC News. 20 December 1998.
  18. ↑ "Lockeed, Britain's GEC may be in merger talks". Articles.latimes.com. 28 December 1998. Retrieved 5 June 2010.
  19. ↑ GEC may get French round 'non' to bid
  20. ↑ "British Aerospace and Marconi Electronic Systems form the third largest defence unit in the world". Jane's International. 19 January 1999.
  21. ↑ "Marconi Establishes Enterprise Technology Centers" (Press release). PR Newswire. 26 September 2000. Retrieved 20 January 2009.
  22. ↑ "Kvaerner sells UK shipyard". Money.cnn.hu. Retrieved 5 June 2010.
  23. ↑ "The Economist on telecoms companies back from the dead, mentions Marconi". Economist.com. 10 June 2004. Retrieved 5 June 2010.
  24. ↑ "The Economist mentions GEC in context of "dotcom madness"". Economist.com. 27 October 2005. Retrieved 5 June 2010.
  25. ↑ Harrison, Michael (26 October 2005). "Marconi sells to Ericsson and consigns a century of industrial might to history". The Independent (London). Retrieved 5 June 2010.
  26. ↑ 26.0 26.1 "SEC filing - Marconi Corporation plc". brand.edgar-online.com. Retrieved 14 July 2012.
  27. ↑ "SEC - ADR listing of Marconi Corporation plc". SEC. Retrieved 14 July 2012.
  28. ↑ "Marconi discussing £600m buy-out". BBC News. 7 August 2005. Retrieved 5 June 2010.
  29. ↑ Le Maistre, Ray (27 April 2005). "Analyst: Marconi in Line for 21CN". Light Reading. Retrieved 2006-11-28.
  30. ↑ Oates, John (25 October 2005). "Ericsson buys Marconi". Theregister.co.uk. Retrieved 5 June 2010.
  31. ↑ "Marconi(2003) plc information in KPMG website". fundinguniverse.com. Retrieved 14 July 2012.

Further reading

External links