GE's finance unit woos middle-market chiefs in Pittsburgh
General Electric Co. came to Pittsburgh on Wednesday as part of a 20-city bus tour to strengthen its financial services arm even as it cuts its size and changes management.
GE Capital's Roadshow for Growth, hoping to add middle-market customers, entertained about 75 at an event at the Sports Museum in the Heinz History Center, as GE Capital Chief Commercial Officer Mike Pilot and former Penguins star Ron Francis talked motivation, competition and winning.
Pilot also met with executives at McKesson Automation Inc. in Cranberry and Accrotool Co. in New Kensington about challenges and opportunities companies like them are facing.
Pittsburgh is the seventh stop on a tour that started in Kansas City last month and goes to Cleveland on Thursday.
The manufacturing giant, which makes jet engines, locomotives and medical scanners, also announced a new executive to lead its finance unit as it scales back its size and comes under heightened regulatory oversight.
GE named Chief Financial Officer Keith Sherin to lead GE Capital, succeeding the retiring Mike Neal.
Pilot said a company like Accrotool, which has prospered under CEO Bill Phillips Sr., is the kind of middle market company he would like to add to GE Capital's portfolio of customers.
“This is the middle market, right here,” Pilot said, standing on Accrotool's production floor.
Phillips, 71, started the company 41 years ago as a three-man machine shop. It now employees 110 workers who work three shifts, 24 hours, every day, fueling $15 million in annual sales.
At McKesson, Pilot met with CEO Kraig McEwen and toured a manufacturing plant that makes equipment that automates the delivery of drugs in hospital pharmacies. “We were excited they wanted to come in,” said spokeswoman Betsy Martinelli.
“When middle market companies do well, the economy does well,” said Pilot, who oversees selling strategies and marketing at the finance unit.
The middle market sector — companies with annual revenue between $10 million and $1 billion — generates $9 trillion in revenue annually and accounts for 34 percent of employment nationwide, according to the National Center for the Middle Market at Ohio State University's Fisher College of Business.
Pilot said the nation's 200,000 middle market companies have always been a focus of GE Capital, with lease financing for equipment purchases and commercial loans for operations.
For 80 million consumers, GE Capital offers credit private-label credit cards and retail sales financing.
The middle market is often overshadowed by the nation's 6 million small businesses and 2,000 large corporations, but it is a crucial sector, Pilot said.
The mid-sized companies actually increased employment during the Great Recession, a performance he called “dramatic.”
“It's super dramatic in Pittsburgh,” Pilot said, where middle market companies comprise only 1 percent of total businesses, but account for 34 percent of Pittsburgh's employment, according to data from Dun and Bradstreet and research by the National Center for the Middle Market.
The segment has 1,611 companies with 514,000 employees in the Pittsburgh region. Revenue from these companies grew by 6.7 percent in 2012 to $72.4 billion, compared to 2.9 percent at large companies. Employment grew 4.0 percent in 2012.
Pilot said middle market CEOs tell him their top concerns are taxes, government regulations, such as health care costs, and finding skilled workers.
Mark Roach, Accrotool's vice president of sales and marketing, said he hopes the GE Capital tour is able to attract some attention from government officials in Washington.
“Hopefully they can carry the message to Congress on what the needs are, and what they can do to help,” Roach said.
One of those things is worker training. “I'd like to see more training from the vocational schools, there's just not enough,” Phillips said.
Many young people are focused on going to college and working with computers. “We need more guys out in the field, “ he said. “We have guys here who make $70,000 to $80,000 a year.”
GE Capital had $538 billion in assets as of March 31, larger than all but six banks, according to data compiled by the Federal Reserve. The unit reported profits of $7.4 billion on $46 billion in revenue last year.
GE CEO Jeffrey Immelt has pledged to reduce GE Capital's size. Pilot said total assets have since declined to about $400 billion, and should decline further by the end of the year.
John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or firstname.lastname@example.org. Staff writer Tom Yerace and Bloomberg News contributed to this report.