The Year in Industrials: Who Won, Who Lost and Who Improved

The broader industrial economy is set to enter 2024 on shaky footing as an inventory hangover from the supply-chain crisis starts to look more and more like a prelude to underlying demand weakness and the reality of the reshoring boom proves much more nebulous and in flux than the prevailing narrative. What was a perception of rising tides is increasingly becoming more about which specific boats float or sink when the economic waters become choppier. So as 2023 draws to a close, it’s a good time to take stock and reflect on this past year’s industrial winners and losers.


General Electric Co. took an early lead as the top performing industrial stock on the S&P 500 Index and never let it go, with the shares on track for the best annual return of the millennium. Under the leadership of Chief Executive Officer Larry Culp, the onetime quintessential industrial conglomerate is speeding toward a much more simplified future. GE spun off its health-care business in January and is on track to carve out its gas and wind power operations by April. That will leave GE focused on its premier aerospace business with a few legacy liability stragglers — namely the long-term care insurance business. After decades of chasing fads with expensive deals and unearthing unwelcome surprises in the folds of its corporate sprawl, it finally seems as if GE’s businesses are in the right place at the right time.

Building a Company That Finally Works

While some US airlines, particularly lower-cost carriers, are having to discount tickets to fill up domestic seats, the world is still short airplanes overall. Vertical Research analyst Rob Stallard estimates airlines globally will need 600 more jets over the 2023-to-2028 period than aircraft makers are currently set to produce as supply-chain challenges continue to foil plans to bolster output. This will force carriers to defer retirements of older planes and pack more people into them. The extra wear and tear should be a boon to GE Aerospace’s maintenance and services business. GE and Safran SA, partners in the CFM International engine joint venture, raised prices on spare engines by a high-single digit percentage in August, four months earlier than normal.

Orders for equipment and services in the aerospace division jumped 34% in the three months ended in September, while the unit’s profit margin swelled to more than 20%, more than double the return on sales at RTX Corp.’s rival Pratt & Whitney unit even after adjusting for a charge from a significant recall of its geared turbofan engine. RTX expects that an average of 350 planes from the GTF-powered Airbus SE A320 fleet will be grounded annually from 2024 through 2026, with a peak of as many as 650 aircraft out of commission in the first half of next year, according to a September update. While the Leap engine that GE produces through the CFM venture has had its own durability hiccups, including fuel-nozzle coking and distressed blades, the resulting disruptions to the in-service fleet have been comparatively minimal. And that’s the other reason GE shares have soared in 2023: After years of being the industrial problem child, the company has left the mushrooming nightmares to its peers.

Costly equipment defects in onshore wind turbines resulted in a €4.6 billion ($5 billion) loss at Siemens Energy AG for the fiscal year ended in September and forced the company to secure a €15 billion financial backstop from the German government, a consortium of banks and its former parent Siemens AG. While GE expects its offshore wind operations to lose about $1 billion both this year and next, its grid and onshore wind units clawed their way to profitability in the third quarter and are expected to make money next year. The company hasn’t had to top off a $500 million warranty provision taken in 2022 for wind turbine performance issues. And soon that business will be someone else’s problem anyway.