On the Call: GE CEO explains growth in orders for big equipment

On the Call: GE CEO on industrial growth

FAIRFIELD, Conn. — A big question lingering over General Electric Co. is when customers will start buying the company’s jet engines, train locomotives, power plant turbines and oil field equipment again after pulling way back on new orders during the recession. It is a key indicator of whether GE’s strategy of using its big industrial divisions to lead it to a recovery will actually be sustainable.

And the willingness of businesses to invest in expensive equipment is a sign of whether the economy is starting to move forward again.

Analysts asked GE CEO Jeff Immelt about the issue during their conference call Thursday after GE released fourth quarter earnings.

QUESTION: So it sounds like you had a fairly huge month in December for the major equipment orders. How do we interpret that? Is this just customers holding back on their budgets until the last possible moment or is there a real improvement in the end markets you are seeing?

IMMELT: Look, I don’t think if you look at the long-cycle businesses there is anybody looking at their budget in the quarter when they buy gas turbines or aircraft engines. These are long-term projects that people plan for and we are piece of the scope. So I think if you look at the energy business, you look at the oil and gas business, those are based on economic activity globally. Aviation again, we are dealing with a phenomenon where we had such great orders over the last three years that the airframe or backlogs are pretty much full through 2012, 2013. And then finally, in healthcare I think you see a little bit of both. I’m sure some people had budget money and they spent it but that’s not a driver of the overall orders when you look at major equipment orders for the company.