A place to grow

The news is really bad in the auto business.  For the first time since 1993 the number of cars sold in the USA in a month has declined to below one million.  Sales are down over 25% from the previous year.  And sales are predicted to decline considerably more in 2009.  The value of General Motors (chart here) has declined to what it was in 1950 - when the Dow Jones Industrial Average was about 269 (GM is a component of the DJIA). (Read article here.) In the 1960s, when GM was king of the industrial companies, a popular phrase was "As goes GM, so goes America."  This was based on the notion that GM was a microcosm of the American industrial economy.  Is this still true - does GM portend the future of America?

A lot has changed in the last 40 years.  Most importantly, the globe is no longer dominated by an industrial economy.  Fewer and fewer people are employed in industrial production.  We see it all around us as we realize that there are more people writing computer code than making computers.  We've shifted to an information economy.  Companies that ignored this shift, like GM, without finding opportunities to get into the growth economy are now suffering.  GM started down the new road once, in the 1980s, by purchasing EDS and Hughes electronics.  But later GM leadership sold those businesses in order to "focus" on the auto business.  So now it's only natural to recognize that the most industrial of the industrial companies are at the greatest risk of failure.  No longer is GM a microcosm of any economy - including America.  As GM goes so goes GM - but that doesn't say anything about the future of America.

Some companies have shifted.  They find new opportunities for growth.  Today, wind energy is getting a big lift due to higher costs for petroleum fuels and increasing restrictions on greenhouse gases from using fossil fuels.  Wind farms already exist offshore European countries, producing over 1,100 megawatts of power.  Now such farms are being built not only on the great prairies of Texas and the American plains, but off the eastern U.S. coastline (read article here.)  While there isn't much interest for investing in auto manufacturing, there is lots of interest for investing in these wind farms to produce electricity - especially in high-cost electricity locations along the eastern seaboard.

And in the middle of this market we find - General Electric (see chart here).  GE is the only U.S. company that makes wind turbines, and is a leader in promoting the new source of power.  While many people have fixated on GE Financial and its woes, they have ignored the fact that GE is an American leader in many markets seeing rapid growth globally - such as wind power, water production, health care equipment and municipal infrastructure development.  These markets are benefitting from the ecomomic boom in China, India and other developing countries, as well as emerging growth in the USA. 

Any country's economy can continue growing if it develops Phoenix companies that keep their eyes on the future and create White Space projects to keep them moving toward growth.  These companies don't fall into the trap of being "focused" on a single business, and dependent upon growth within that historically defined market.  They constantly look for places to grow, regardless of what the company has previously done, and develop opportunities to learn in those new markets so they can create a new Success Formula maintaining growth.  As long as America has companies that keep repositioning themselves for growth - such as GE, IBM, Cisco Systems, Apple, Google, Genentech, Johnson & Johnson, Baxter, etc. - America can have a great future.