VIDEO: What GE Should Have Done with $26 Billion

Jim Anderton shares his thoughts about GE's buyback plan and what he thinks the company should have done with $26 billion.

In this video,’s manufacturing expert Jim Anderton shares his thoughts about GE’s buyback plan and what he thinks the company should have done with $26 billion.

When stories cross my desk about firms as large as General Electric, I always take notice. Recently, GE made a significant announcement. The massive engineering firm with a century-plus history is about to sell its financial arm, GE Capital Real Estate, for more than $26 billion.

This is something General Electric CEO Jeff Immelt has been promising to do –  to get GE back to its core competency of being an engineering-focused company. That’s a great thing that should be applauded. Unfortunately, the $26 billion will be used to buy back stock. It’s a popular technique these days because of the way markets are driven. The distortions caused by federal money printing means that it’s a great way to return shareholder value and boost the stock price.

On face value that sounds reasonable, but I have to ask: what could the company have done with $26 billion in capital? Imagine the possibilities. Imagine the advances that could be made in medical engineering, in propulsion systems or even in energy.  

GE has a storied history of making great products – everything from my mother’s steam iron that lasted half a century to the J79 turbojet engine. But one thing I think could have been exploited here that is wildly under invested is fusion research. I don’t mean cold fusion, I mean hot fusion.  I’m talking about fusion on a smaller scale than what the National Ignition Facility is doing (the big money, government-funded research).

There are several companies working on this type of research that are starved for capital. A favorite of mine is a fusion energy project at Lawrenceville Plasma Physics in New Jersey – they’re doing amazing things on a shoestring budget. Imagine if a firm with the resources of General Electric and their $26 billion windfall, got behind a project like fusion energy. My guess is the problem could be cracked in five to 10 years and the world would have a clean, essentially limitless energy supply.

I’m not suggesting this is the only way to spend the company’s billions, but there has to be a better way than using it in a share buyback.  

Thumbnail photo credit: Paolo Ferrarini on Flickr, via Creative Commons

Written by

James Anderton

Jim Anderton is the Director of Content for Mr. Anderton was formerly editor of Canadian Metalworking Magazine and has contributed to a wide range of print and on-line publications, including Design Engineering, Canadian Plastics, Service Station and Garage Management, Autovision, and the National Post. He also brings prior industry experience in quality and part design for a Tier One automotive supplier.