GE is looking to ramp up its operating margin throughout its various manufacturing processes in order to boost operating profit. On the one hand this is a 'no duh' sort of press release. What company isn't trying to make its manufacturing process cheaper so that it can ask the same price and make more profit on each item?

But in order to stay on top GE is looking to take its 15% operating profit and boost that a percentage point each year to 18% by 2009. To do that it is focusing on increasing margins in places like its locomotive plants. Right now a train engine takes about a month to build, and GE wants it to take ten days.

Although investors will no doubt applaud this focus on the margin and faster production terms, one hopes that a manufacturer of jet engines that keep our planes aloft does not lose sight of the longer term picture. Some of us will remain happy with GE focusing on quality in some areas rather than increased margins.

Back in 2000 two GE employees, followed by five more in 2002, claimed that GE passed off defective jet turbine parts to the US military. Some made their way into new machinery, others for spare parts. As the suit progressed the US government, investigating the plant, joined the employees in the suit against GE.

GE agreed to settle this for $11.5 million, however maintains that management did this solely to 'put it behind' them and move on, and strongly disputed the allegations made.

Lest one think this is about opportunist employees, only 20% of the money will go to the individual employees, the rest goes to the US government, which decided to join the suit. One does wonder what sort of impact this might have on future government dealings with that section of GE, as it seems to have come to the same conclusion as the employees.

GE ended the day at $32.36, up 25 cents. Friday's earnings report focused on the strong cash flow and 9% revenue growth the company experienced, as well as the drag exerted on the company by its plastics division and NBC, with GE's CEO Jeff Immelt restating GE's strong belief that NBC would turn around by the end of the year and begin to show a profit.

GE Industrial is probably keeping a close eye on Boeing. Right now Airbus is struggling and Boeing is taking full advantage of this. Boeing's 787 Dreamliner will use GE and Rolls Royce engines, and the Dreamliner has experienced some setbacks. However, nothing like the setbacks Airbus has had. If Boeing gets the Dreamliner right, on schedule, and ahead of Airbus, it will no doubt be able to snag more sales. And that might translate into some extra orders for GE Aviation.

Earlier this morning I posted about the GE jet engine which exploded due to fatigue. It quickly became one of our most visited stories today.

Craig, a pilot, commented on his impressions of the GE CF-6 in the comments area and said that he only knew of one in-air incident with the engine, which caused an unscheduled landing of the plane. He guessed that because the media was nearby and able to access the scene of the explosion, that caused coverage of the incident out of proportion to its significance.

GE's web page for the engine in question shows that it has a long and  industrious  history for GE as a workhorse engine. The CF-6 has been in production for more than 30 years, since 1971, and it is the most common high bypass turbofan around. It's very common in widebody aircraft like the Airbus, the A300 series, the Boeing 767 and 747, and the DC-10.

The engine does have some history of 'uncontained failures.' This site points out pictures of the recent failure and notes that in January of this year the NTSB put out a notice about the particular engine in question due to an incident in December of 2002 from an 'uncontained failure' as well as an earlier report in September of 2000.

An American Airlines 767 had a GE jet engine explode during testing two weeks ago in Los Angeles. The explosion caught the plane on fire and tossed chunks some 3,000 feet away. The jet engine had fatigue, which caused the explosion and led to chunks ripping through the airplane's body. Thankfully, there were no injuries to the testers aboard the plane.

However the National Transportation Safety Board is investigating exactly what happened, and it may lead to the NTSB calling for more frequent inspections of GE jet engines.

This tarnishes the engines and GE's reputation. However, more frequent inspection will hopefully lead to any problems getting caught ahead of time, without something like this occurring on a plane full of passengers in the sky. That certainly would have more of a negative impact for all involved.

[picture credit: wikipedia]