Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, September 8, 1995 TAG: 9509080086
SECTION: BUSINESS PAGE: B8 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE: LENGTH: Long
General Electric Co.'s Industrial Drive Systems unit, having completed a round of job cuts, now plans to expand its global reach, pursue new markets and double an already substantial share of its worldwide market by the end of this decade, said GE Vice President Russell L. Shade.
Shade announced the goals Thursday in his first interview since March, when GE named him to lead the Salem-based Drive Systems Division and manage the Salem plant. He succeeded Tom Brock, manager of the operation for five years, who resigned to begin his own consulting business.
No workers were laid off during Brock's tenure, and he told them last year they had been successful in driving down costs faster than the competition. So it came as a surprise, at least to outsiders, when Shade said in July he was cutting the plant's 1,200 nonproduction work force by 100 jobs, or 8 percent. The total work force at the plant now is about 2,000.
Shade, fresh from talks this week with GE Chairman Jack Welsh about the plant's future, said the job cuts were not the start of any new trend or master plan. Most of reduction was accomplished with voluntary departures and attrition, and fewer than 10 workers actually were laid off.
The job cuts were made as a last resort when it became apparent that other efforts to cut costs at the plant wouldn't be enough, Shade said. Cuts in jobs, travel and in other areas have brought overall costs at the plant down 20 percent, he said.
Shade said he spent his first three months in Salem familiarizing himself with the drive systems business and its health. "I gave it a physical," he said. And although the business is healthy, it became apparent that it was going to see declines in 1996 that would not be acceptable to GE or its shareholders.
GE Drive Systems is a unit of GE Motors & Industrial Systems, based in Fort Wayne, Ind., which, itself, is a division of General Electric Co. of Fairfield, Conn. The parent last year reported earnings of $4.73 billion on sales of $60.11 billion.
The Salem plant is a worldwide supplier of computerized drives, controls and automation systems for a wide variety of industrial and utility uses. The worldwide market for drive systems is worth $9 billion, Shade said.
Shade declined to reveal the plant's share of the market but, from all indications, it is substantial. "Our goal for this business is to double its size by the year 2000," he said.
Until now, the plant has concentrated on supplying the "high end" of the market, such as steel and paper mills, factories and power plants. In the future, the plant will increase business by making controls for smaller uses, such as operating elevators and other more common types of machinery, Shade said.
The company has begun hiring people with experience in that type of business, Shade said. The impact on employment at the Salem plant may not be that great, though, because the controls likely will be produced by partners in the countries where they are sold, with GE providing sales and other support, he said.
With worldwide pricing by its competitors continuing to drop, the plant must continue to cut costs, he said, such as investing in new technology that will help increase productivity.
When he announced the job cuts, Shade cited as a reason for cutting costs the switch by GE's customers from direct-current technology, the plant's traditional specialty, to machinery using alternating current. A key task over the next year or two is to develop the plant's expertise in AC technology, he said.
Welch has agreed to invest $25 million in the plant over the next two years in that effort, Shade said. The money comes in the form of salaries for 150 engineers, who already are working at the plant and would have to leave without the new effort, Shade said. The plant employs 700 people with technical degrees, including 200 with advanced degrees. Most are engineers and computer scientists.
The plant is making a new commitment to quality, Shade said. In the past, new products were shipped and then reworked and improved based on customer experience. In the future, the products won't be let out the door until they're right, he said. "We have stopped shipments this year because we weren't happy with them," he said.
Shade has brought to the plant a new quality leader who formerly was employed by GE's aircraft engine business and was a technology leader from GE's aerospace business. Another addition is a manager dedicated to increasing the plant's worldwide business. That will mean going after new contracts in places such as China and Mexico, but not taking jobs away from Salem, he said.
The Salem plant's major competitors are ABB ASEA Brown Bovert Ltd., a Swiss company, and Siemens AG of Germany. The difference between the Salem plant and its competitors are GE's engineers, who are experts in the processes used by the various industries the plant sells to, Shade said.
Shade, 45, grew up in Medfield, Mass., near Boston, and holds engineering degrees from Purdue University and the Massachusetts Institute of Technology. He has been with GE 22 years and was most recently general manager of the GE Power Systems Navy & Small Steam Turbine Department in Fitchburg, Mass.
He has turned down jobs GE has offered him before, but he didn't hesitate to take this one, Shade said. "I saw this as a good challenge for me, and I was running my own business again."
by CNB