Posts Tagged ‘General Electric’

Who Are the 47 Percent?

Thursday, October 18th, 2012

Will the real 47 percent please stand up?  Although Republican presidential candidate Mitt Romney in a now famously leaked video suggested that nearly half of Americans believe that they are victims for relying on Social Security, Medicare, Medicaid, unemployment benefits, etc., we thought it might be helpful to look at who benefits the most from government largesse.

Writing in The New Yorker, columnist James Surowiecki notes that, “Even as he assails people on Medicaid and Social Security, and those who receive the earned-income tax credit, for being dependent on government, Romney didn’t mention another prominent group that’s dependent on government: the American companies whose profits rely, in one form or another, on government assistance.”

Historically, the federal government has protected American business with high tariffs, land grants given to railroads, and more than 80 million acres both onshore and offshore leased to energy companies.  An 1872 law still in effect lets mining companies lease federal land for just $5 an acre while keeping the profits from all the gold, silver or uranium they find.  Renewable-energy companies are subsidized; farmers receive nearly $5 billion a year in direct payments and billions for crop insurance and drought aid despite record-high food prices.

As currently written, the tax code helps business.  American manufacturing enjoys a $20 billion annual tax break, while state and local governments cough up $70 billion a year to lure companies or prevent them from moving away.  While this strategy creates new jobs in a given locale, some see the incentives as giveaways to help companies move from one state to another.  Another form of assistance is government regulations which can boost corporate profits, especially copyright law, patent protection and intellectual-property rights.  According to economist Dean Baker, patent protection is worth hundreds of billions of dollars a year to the pharmaceutical industry alone.

Realize that we are not taking side. We simply want to suggest that government assistance exists on both the 53 percent and 47 percent side of this electoral divide.  Surowiecki says that corporate welfare isn’t necessarily a bad thing. Some of these giveaways arguably do a lot of good. But companies that benefit from these policies are just as dependent on the government as the guy who gets the earned-income tax credit.

LED Lightbulbs More Affordable, Easy on the Electric Bill

Wednesday, February 15th, 2012

If you’d like to slash your electric bill, switch to the LED light bulb, the “light-emitting diode” that General Electric invented 50 years ago.  Now, LED bulbs are the focus of intense competition among all of the major lighting manufacturers.  “There are two races going on,” said Todd Manegold, LED product manager for Philips Electric.  “One is the race to equivalency.  It’s about delivering light bulbs that replicate or imitate what people are used to.  Once you reach equivalency, the game is how to make it more affordable.  We think we have gotten it more affordable.”

According to industry experts, within 10 years LEDs will surpass conventional lighting such as halogen and compact fluorescent bulbs (CFLs).  This will not occur because of government regulations, but rather because it makes economic sense.  The changeover is already underway for commercial customers, particularly in new construction, where newly designed fixtures incorporated LEDs.  But there are an estimated 2.6 billion light sockets in American homes, making them a major market for the industry.  Philips for some time has offered LED bulbs to replace conventional 40-watt, 60-watt and 75-watt lamps.

LED prices are falling rapidly.  Replacing an old 60-watt bulb with a Philips 12.5-watt LED bulb cost approximately $40 one year ago.  The price now averages $25.  Introduced in 2010, the first household LED able to direct light in all directions — the 8.5-watt bulb — was $50.  Now it retails for $30 to $35.  Philips considers CFL bulbs and especially its halogen bulbs as “bridge technology” to LEDs — products that people will use until LEDs become more affordable.  GE Lighting has had virtually the same experience.  “Think of it as a lighting revolution,” said Linda Pastor, GE’s LED product manager.  The switch will take less than 10 years, industry experts say.  “I absolutely believe that the incumbent lighting technology will be replaced by solid state alternatives — all of them with very rare exceptions, within 10 years,” said Tom Griffiths, president and publisher of Austin-based Solid State Lighting Design.

Writing for MSNBC Real Estate, Brian Clark Howard says that “If you want to consider an LED bulb for your fixture, you’ll get even better efficiency and longer life.  For a 60-watt replacement, one popular choice right now is the Philips 12-watt Ambient LED, which produces remarkably soft, yellow light.  It’s also fully dimmable, and is rated to last 25,000 hours.  It costs $40, which we know is more than you’re used to spending on a bulb.  But let’s calculate potential savings.  For a lamp that’s on six hours a day, that would give us 12 watts x 6 hours x 365 = 26.3 kWh.  At 12 cents per kWh, that’s $3.12 a year to operate.  Subtract that from $16, and that’s a savings of more than $12.80 a year.  With a lifespan of 25,000 hours, it should theoretically last for about 12 years in this application.  Over 12 years, we would otherwise have to buy 24 incandescents, for a cost of $18, or about $1.50 each year.  With the annual savings of $12.80 in energy and $1.50 in bulbs, the LED will pay for itself in just under three years.´

Another advantage that LED has over CFL bulbs is that they don’t emit a mercury hazard into the atmosphere.  Many states have been instrumental in passing laws to reduce toxic pollution in their workplaces, communities and our environment.  Additionally, the majority strongly support replacing harmful products with safer alternatives when available.  In the case of light bulbs, the switch to CFLs cuts mercury and other pollutants such as carbon dioxide and sulfur dioxide.  CFLs use less mercury because they require less electricity to produce the same amount of light as an incandescent bulb.

According to the Environmental Protection Agency, a power plant emits four times more mercury pollution to produce the electricity that lights an incandescent bulb than a CFL for the same amount of time.  CFLs do contain a very small amount of mercury sealed within the glass tubing – though  no mercury is released when the bulbs are intact or in use.  That is why it is important to recycle these bulbs.  Many states provide convenient venues to recycle old CFLs, which prevents spent bulbs from breaking in the trash and releasing mercury into the environment.

Warren Buffet Bullish on U.S. Credit Rating

Monday, August 22nd, 2011

Standard & Poor’s may have downgraded the United States credit rating from AAA to AA+ and the bears may have taken over Wall Street, but the Berkshire Hathaway chairman and billionaire Warren Buffett believes that the nation deserves a AAAA rating.

In a recent appearance on CNBC, Buffett said that he still believes that the United States’ debt is AAA and that he’s not changing his mind about Treasuries based on Standard & Poor’s downgrade.  “If anything, it may change my opinion on S&P,” according to the Oracle of Omaha.  “I wouldn’t dream of putting it anywhere else,” Buffett said, noting that at Berkshire, the only reason he’s sold Treasuries in the past is to purchase stocks or make acquisitions.  Berkshire is still buying T-bills, even though yields have declined.  “If I have to buy (Treasuries) at a zero percent yield, I will,” he said.  “I don’t like it, but we’ll do it.”

Buffett has something of a vested interest in criticizing Standard & Poor’s.  Berkshire Hathaway is one of the biggest shareholders in Standard & Poor’s main competitor Moody’s with about 28 million shares. But the billionaire has long urged people to make their own decisions about an investment’s prospects without relying on credit rating agencies.  Buffett said the action doesn’t change his view on the soundness of U.S. Treasury bills.  At least $40 billion of Berkshire Hathaway’s approximately $48 billion cash and equivalents is in U.S. Treasury bills, and Buffett won’t consider investing it elsewhere.

According to Buffett, America’s leaders may have a difficult time agreeing on the country’s financial future and the value of the dollar may slide, but that won’t keep the world’s richest nation from paying its debts.  The United States has a GDP of about $48,000 per person, and the Federal Reserve can always print more money.  “Our currency is not AAA, and in recent months the performance of our government has not been AAA, but our debt is AAA,” Buffett said.

Writing on the InvestorPlace.com website, Jeff Reeves says that “Before you scoff that Buffett is just a bygone relic of an era during which stocks like General Electric truly did have bulletproof dividends and it would have been unfathomable for stocks like General Motors to go bankrupt, consider this: In September 2008, the depths of the financial crisis when nobody knew which bank would fail next, Buffett and Berkshire dumped $5 billion into preferred stock of Goldman Sachs.  Thanks to the 10 percent interest on those shares, Berkshire Hathaway earned a cool $500 million per year in dividends before Goldman bought back the stock several months ago.  What’s more, the investment bank paid a hefty 10 percent premium to buy back those preferred shares.  Maybe it was crazy to jump into banks headfirst when the market was going haywire in 2008.  But it was awfully profitable for Buffett.  You might think it’s crazy to stick to your buy-and-hold strategy now, or to continue to rely on U.S. Treasury Bonds.  But take a deep breath and remember that not everyone is screaming and running for the hills.  Yes, persistent problems with unemployment, the political bickering in Congress and the flatlining of our American economy are serious issues.  But they are hardly new.”

Not everyone agrees with Buffett.  According to the Equity Master website, “We must say that we do not agree with Mr. Buffett.  We are not arguing with the credibility of S&P, whose reputation admittedly became tainted when it gave the highest rating to many mortgaged backed securities in the months leading up to the demise of Lehman.  But that does not mean that the U.S. is without some serious problems.  Indeed, the U.S.’ mounting debt is a huge cause for concern and the government’s latest move to raise the debt ceiling is only likely to postpone an eventual default and not entirely extinguish it.  Moreover, the claim that the U.S. can pay its debt because it can print more money is a dangerous one to make.  Printing money never really solved America’s problems.  The two big quantitative easing programs and their failure to revive the sagging U.S. economy is testimonial to the fact.  One thing that it will certainly do is bring down the value of the dollar and cause inflation to accelerate posing a fresh set of problems for the U.S.  So, while criticisms can be piled on S&P, downgrading of the U.S.’ credit rating is something that the world’s largest economy had a long time coming.”

Firstpost agrees that Buffett is wrong.  “Among other things, he said that the U.S. deserved a AAA credit rating when the S&P decided to bring it down to AA+. He also believes the U.S. will avert a double-dip recession.  Well, Mr. Buffett, you are already half-wrong. A slow-growing nation with a 100 percent debt-to-GDP ratio cannot be AAA by any stretch of economic logic.  It makes India’s 70-72 percent debt-GDP ratio look like the epitome of prudence.  As for the other half of your prediction – that the U.S. will avoid a double-dip recession – the jury is out on that one, but the recession wasn’t the reason for the S&P downgrade anyway.  There are two reasons, or maybe three, why the U.S. is in a mess.  One is that it is overleveraged – in deep debt – both at the level of government and the common people.  Two, the law that the U.S. can indefinitely live beyond its means has a flaw.  It was built on the assumption that dollar debts can be paid off by printing more of the green stuff forever.”

GE Enters the Solar Power Business

Wednesday, June 29th, 2011

The nation’s largest conglomerate – General Electric – is getting into the solar business in a big way with the firm’s announcement that it is investing $600 million to build a new solar-panel manufacturing plant as it pursues what it thinks could be a $3 billion business by 2015.  The firm, already a leader in renewable energy, has designed a thin-film solar panel that converts sunlight to electricity more efficiently than any other product currently on the market.  The firm, a leading manufacturer of wind- and natural gas-powered electric turbines, plans to open a factory in an as-yet unknown location by 2013.  The facility will employ 400 workers and produce enough solar panels annually to power 80,000 homes.

“The biggest challenge today for the mainstream adoption of solar is cost, and the way you move cost is efficiency,” said Victor Abate, vice president of GE’s renewable energy unit.  “We see ourselves continuing to push that and continuing to move efficiency and as a result the costs of solar continue to come down.”  According to Abate, a decision on where to locate the factory will be made within the next three months.  The decision will be based on criteria including proximity to GE’s research centers, available space, and state and local government incentives, Abate said.  GE expects to make a decision before the end of the year at the latest.

GE’s entry into the solar business comes at an excellent time.  Solar panel installations are expected to surge in the next two years as the cost of generating electricity from the sun approaches that of coal-fueled plants. Large photovoltaic projects would cost $1.45 a watt to build by 2020, half the current price, according to Bloomberg New Energy Finance estimates.  Solar is feasible against fossil fuels on the electric grid in sunny regions such as the Middle East.  “We are already in this phase change and are close to grid parity,” said Canadian Solar chief executive Shawn Qu.  “In many markets, solar is already competitive with peak electricity prices, such as in California and Japan.”

Solar photovoltaic system installation has the potential to nearly double to 32.6 gigawatts by 2013 from 18.6GW last year, according to New Energy Finance.  Manufacturing capacity worldwide has quadrupled since 2008 to 27.5GW annually; 12GW of production will be added in 2011.  Canadian Solar had about 1.3GW of capacity and is expected to reach 2GW in 2012, Qu said.


Writing in Time’s “Ecocentric” column, Bryan Walsh says that the new plant is “Good news for solar advocates and bad news for competitors — General Electric is ready to break into the solar cell business in a major way.  The $218 billion company announced today that it had built a solar module with the highest-ever efficiency rate for cadmium-telluride thin film — the most popular low-cost solar technology — at 12.8 percent, according to independent testers at the National Renewable Energy Laboratory.  That announcement came as GE told reporters that it intends to manufacture those solar modules at a 400-MW factory — in what would be the biggest such facility in the U.S. — that is set to open in 2013.  GE also completed the acquisition of PrimeStar Solar, the Colorado-based thin-film manufacturer, which will complement its recent acquisition of the power conversion company Converteam.”

It’s the Jobs, Stupid.

Wednesday, February 16th, 2011

President Obama recently took a short stroll from the White House and through Lafayette Park to give a speech in what might be termed enemy territory – the U.S. Chamber of Commerce. The subject was jobs and what the Chamber can do to jump start hiring by the companies that form its membership.  Noting that American companies are sitting on approximately $2 trillion in cash, the president challenged the Chamber to invest some of that money by hiring Americans who are out of work.

“Many of your own economists and salespeople are now forecasting a healthy increase in demand.  So I want to encourage you to get in the game,” Obama said, referencing the tax credits his administration negotiated to spur new investments.  “As you all know, it is investments made now that will pay off as the economy rebounds.  And as you hire, you know that more Americans working means more sales, greater demand and higher profits for your companies.  We can create a virtuous cycle.  Not every regulation is bad; not every regulation is burdensome on business,” he said.  “Moreover, the perils of too much regulation are matched by the dangers of too little.”

Relations between the president and the Chamber – one of the nation’s most powerful lobbying groups — have been chilly and the speech was an effort to find common ground.  Since the Democrats’ defeat in the November mid-term election, Obama has been trying to mend fences with big business.  One part of that strategy was to hire Bill Daley, a former Chamber board member and JP Morgan Chase executive, as his new chief of staff to replace Rahm Emanuel.  Additionally, he named General Electric CEO Jeffrey Immelt to head an economic advisory panel dedicated to job creation.  According to the president, “I will go anywhere anytime to be a booster for American business, American workers and American products, and I don’t charge a commission.”  

The Chamber gave the president a warm welcome, with the organization’s president Thomas Donohue expressing the body’s “absolute commitment” to working with the White House on turning around the economy and creating new jobs.  “Our focus is finding common ground to ensure America’s greatness in the 21st century,” he said.  “America works best when we work together.”

The president’s remarks came on a day when several Illinois firms warned that they are planning to lay off employees or close facilities. For example, Kmart is planning to close several stores in Illinois.  Gold Standard Baking, Inc., will close a commercial bakery in Chicago, slashing 73 jobs.  Another 67 employees are likely to be laid off at Itasca-based C. D. Listening Bar Inc., which sells DVDs, CDs, books and video games online at DeepDiscount.com.  AGI North America, LLC, a paperboard box manufacturing company in Jacksonville, is closing at the end of March, putting 70 employees out of work.  Gray Interplant Systems, Inc. – a warehousing and storage company in Peoria and Mossville – is planning to lay off 167 employees in April.

So why are American companies not hiring – or not hiring on their home turf?  According to the Chamber’s Donohue, it’s a variety of reasons, including new regulations contained in the Patient Protection and Affordable Care Act and the Dodd-Frank financial reform bill. Additionally, companies are holding onto their cash to fund future acquisitions.  Consolidation makes new regulatory burdens easier to bear.  Once companies’ regulatory costs are clear and under control, they can begin hiring, he said.  Finally, demand remains relatively low.  Once spending improves, the Chamber believes that companies will have no choice but to invest in additional personnel to meet that demand.  As consumer and business spending grows, so should jobs.

And, the jobs are going elsewhere. The Economic Policy Institute, a Washington think tank, says American companies created 1.4 million jobs abroad in 2010, compared with less than 1 million in the United States. The additional 1.4 million jobs would have cut the unemployment rate to 8.9 percent, according to Robert Scott, the institute’s senior international economist.

Federal Reserve Comes Clean on Who Received Bailout Money

Thursday, January 27th, 2011

Federal Reserve Comes Clean on Who Received Bailout MoneyAt the instruction of Congress, the Federal Reserve has released the names of the approximately 21,000 recipients of $3.3 trillion in aid provided during the financial meltdown –without doubt the nation’s worst economic crisis since the Great Depression.  Not surprisingly, two of the top beneficiaries were Bank of America and Wells Fargo, who received approximately $45 billion each from the Term Auction Facility.  American units of the Swiss bank UBS, the French bank Societe Generale and German bank Dresdner Bank AG also received financial assistance.  The Fed posted the information on its website in compliance with a provision of the Dodd-Frank bill that imposed strict new financial regulations on Wall Street.

One of the biggest surprises on the list is the fact that General Electric accessed a Fed program no fewer than 12 times for a total of $16 billion.  Although the Fed originally objected, Congress demanded accountability because there was evidence that the central bank had gone beyond their usual role of supporting banks.  In addition, the Fed purchased short-term IOUs from corporations, risky assets from Bear Stearns and more than $1 trillion in housing debt.

Reactions to the revelations are both positive and negative.  On the positive side, Richmond Fed President Jeffrey Lacker said “We owe an accounting to the American people of who we have lent money to.  It is a good step toward broader transparency.”  Sarah Binder, a senior fellow with the Brookings Institution, disagrees, noting that “These disclosures come at a politically opportune time for the Fed.  Just when Chairman Bernanke is trying to defend the Fed from Republican critics of its asset purchases, the Fed’s wounds from the financial crisis are reopened.”

Senator Bernard Sanders (I-VT) said “We see this (list) not as the end of a process but really a significant step forward in opening the veil of secrecy that exists in one of the most powerful agencies in government.  Given the size of these commitments, it is incomprehensible that the American people have not received specific details about them.”