Mubadala Brings Good Things to Light?

Mubadala Development Company, an investment fund controlled by the government of the Emirate of Abu Dhabi (photo), announced Tuesday that it was forming an extensive partnership with U.S.-based industrial powerhouse General Electric. The fund, which said it intends to become one of GE’s top ten institutional investors, will collaborate with the company in areas such as commercial finance, development of clean-energy technology, aviation maintenance and oilfield services. The finance joint venture alone will involve a combined investment of $8 billion.

We’ve gotten used to wobbly U.S. financial institutions such as Citigroup and Merrill Lynch turning to sovereign wealth funds for infusions of capital. Are we now going to see major U.S. industrials do the same? GE, which is not ailing like the financials, will no doubt insist that it is not being propped up by Mubadala but is simply exploiting common areas of interest with the fund.

Even if the arrangement is not an indication of financial weakness, it is another sign that GE is abandoning its status as a U.S. company. The process has been underway for quite some time. Twenty years ago, then-CEO Jack Welch was describing GE as “boundaryless,” and he used the company’s global reach, among other things, to weaken labor unions. Welch—known as Neutron Jack because, like a neutron bomb, he eliminated workers while allowing buildings to remain standing—was also notorious for his statement that factories would ideally be built on barges so they could be readily transported to wherever labor costs were lowest.

Over the past decade, GE has made massive investments abroad, opening not only production facilities but also research & development centers in countries such as India and China. Meanwhile, it is dumping major U.S. operations such as its century-old home appliance business.

The results can be seen in the company’s financial statements. A decade ago, GE bragged in its annual report (p.39) that it “made a positive 1997 contribution of approximately $6.3 billion to the U.S. balance of trade.” The company’s 2007 report does not even mention how much it exported from the United States, while disclosing (p.99) that only 35 percent of its property, plant and equipment is now located on American soil.

So, while GE dazzles us with its “eco-imagination” ads touting its commitment to renewable energy, the company is hooking up with a tiny Middle Eastern country that is awash with petrodollars. American workers and communities, meanwhile, are left to pick up the pieces.

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