NEW YORK (
(GE - Get Report) grew earnings in its appliances and lighting unit largely through layoffs and discretionary spending cuts last year, but now it's looking to energy-saving initiatives to spur growth.
|James Campbell, GE Lighting and Appliance chief
"A lot of it was tough cost actions," says James Campbell, the unit's President and CEO, in an interview with
TheStreet. "We had to make some draconian kinds of moves around head count, T&E
travel and entertainment spending
-- a lot of the traditional things a lot of other companies did. We were able to get some deflation in the marketplace and leverage that, and you know quite honestly it was a lot of blocking and tackling because our top line was down."
The appliances and lighting unit grew earnings by 10% last year, delivering $400 million in operating profits to the parent. General Electric is slated to report its first-quarter results before the opening bell on Friday.
>>>General Electric: Earnings Preview
A big chunk of the unit's layoffs came in Hungary, where GE produces incandescent light bulbs. Many governments, including the United States and the European Union, are prohibiting the use of those bulbs in favor of more energy-efficient products. GE lighting announced last year it would cut 2,570 jobs in Hungary.
Once the core of GE's business, the appliance and lighting unit, which is headquartered in Louisville, Ky. and employs 27,000 people, gets little attention these days. Until last year, the businesses were part of a GE division called Consumer & Industrial, which accounted for 6.2% of revenues in 2009. That division also included an electrical distribution business, however. GE does not disclose the size of these individual businesses.
GE tried to sell its appliance unit in 2008, but pulled it off the market when the credit crisis drove away potential buyers. Three investment bankers I spoke to all said they thought there was a decent chance GE would look to sell both appliances and lighting in the future, though they had no knowledge that GE was actively contemplating such a move. Two of the bankers were fairly negative on the businesses, while the other (who follows GE more closely than the others) argued that they are simply too small to matter to the brain trust at the company's Fairfield, Conn. headquarters.