This is the story I heard from the guy in the seat next to me on the delayed flight home tonight from a business trip. I found it to be a deeply ironic tale of international capitalism.
He told me about a a blue chip, ostensibly American company that milked, bled and then sold off a profitable but run down international division to a Saudi Arabian company, resulting, oddly enough, in the creation of American manufacturing jobs and modernization of American plants. Oh, and a guy named Jack Welsh has a role in this.
Follow me into the tall grass if you would like to know more.
My seatmate tonight was a Ph.D. engineer for a large company doing business internationally. His company was recently a division of General Electric, an ostensibly American company, founded by no less an American business hero than Thomas Edison. His particular division didn't have much to do with GE's core businesses, he said. GE is basically just a bank, anymore, if you go by its balance sheet, but his division's business didn't have much to do with jet engines, light bulbs, locomotives, H-Bombs, generators, etc. that anyone would associate with GE, he told me.
When GE labored under the yoke of Jack Welsh, the engineer told me, the company's focus stayed relentlessly on quarterly performance. This outlier division was considered a cash cow and expenditures for the business were limited to keeping the milk flowing and lowering the price per gallon. Sorry, that metaphor is mine, but that is basically what he said, a little bitterly. Capital projects were deferred and projects were relentlessly outsourced internationally to chase wider profit margins on the short term. The division continued to perform, but from the point of view of the process engineer I was chatting with, the condition of the business end of the business was deplorable.
GE found a buyer for this division, a Saudi Arabian company that specialized in exactly the same business as GE's profitable but seemingly orphaned division. Now the division is owned by people who only think about its business. Remember, this was a sub-division of mighty GE, but independently, still a multibillion dollar international business.
After the sale, everything changed. The Saudis had a ton of money, they were willing to spend it, and they think long term, he told me. They are spending hundreds of millions of dollars on new plant and equipment that GE would never have considered investing in the United States and creating hundreds, if not thousands of new American manufacturing jobs. He said these are good jobs, with some shift workers on overtime in their plants turning hard work and quality performance into six figure incomes.
It's a great story, but the irony wasn't lost on me. There is a name for a place that comes under foreign ownership, imports manufactured goods and exports agriculture or mined products. It is called a colony.
Also, this guy is probably going to vote for Romney, though he said nothing to indicate this. But early in the flight, before we started to converse, he was reading Forbes with what I thought to be considerable attention. A tool, reading tools talking about how to be tools, I thought, at first. Also, over the course of our conversation, I sprinkled in several allusions to my own deep Democratic Party roots and support for President Obama. He rose to none of it but took no visible offense.
But he seemed to approve of a Bain-like, growing, international capitalism with no regard to who owns whom insofar as nations are concerned. He was certainly doing well enough personally; his defense of the Saudis and the contrast he drew with GE was loyal and sincere. He seemed a well educated corporate internationalist who would freeze the blood of any tea-bagger, but nevertheless, to me, a likely Romney voter.
But it hardly seemed the time or place to try and convert him, and he votes in Indiana where it probably won't make a difference in the outcome. So, we parted ways. And while we were still talking, I was composed and attentive on the outside, but inside I was ROTFLMAO at the irony of Saudi Arabians investing in America to create new manufacturing jobs after purchasing a company that tea-party hero, BLS Labor Statistics Denial Conspiracy Theorist Jack Welsh (and therefore GOP super patriot hero) would never have thought of using his quintessentially American company to do.
DISCLOSURE: In financial reporting I have seen disclosures of whether writers have interests in companies they write about. I have an interest in a 401k that has a long position in General Electric.