My mom dreamed of having GE appliances everywhere in our house. The brand was synonymous with quality and durability, and that was a must-have for a working class family that bought something and used it until it wore out. That’s why I’m sad to see this Business Week piece about GE’s possible sale of its $7 billion appliance division. In a nutshell:
First, it’s not global. GE sells the bulk of its appliances to U.S. customers. That makes it hostage to the vagaries of the U.S. economy and, even more, to the volatility in the U.S. housing market. During the housing boom, that allowed the business to rack up double-digit earnings growth again and again. Now, it’s going the way of real estate prices.
Second, the business doesn’t let GE truly differentiate itself from competitors. There aren’t a lot of barriers to entry in building dishwashers, ovens and refrigerators. Everyone can put on the bells and whistles these days, and manufacture in cheaper markets than Louisville, Kentucky. And unlike, say, an aircraft engine or power turbine, there’s only so much service you can build around a microwave.
