IEM Blog

What This Change to the Dow Says About the Future of the Energy Industry

Friday, June 22, 2018

Dow Jones-1

GE is Dropped from the Dow Jones Industrial Index


What does that mean for Energy?

If change is one of the only constants in life, it probably shouldn’t be surprising to see big movement happening in the world of energy. Still, it’s more than a little jarring to see news of General Electric’s departure from the Dow Jones Industrial Average, marking the first time in 110 years GE won’t be tracked by that index.

Reporting for Forbes, Rob Day writes that GE’s drop from the Dow is representative of a period of “creative destruction” affecting all sectors of the energy industry. Citing experience as an investor in the energy sector, Day notes that signs of disruption in the energy sector were evident as long as 15 years ago. Those same signs are bearing fruit today and change seems unlikely to slow down.

But in light of the ongoing change, some big energy companies (like GE) have been slow to adapt, trying to preserve their traditional business models while dabbling in emerging technologies. Day thinks that’s a mistake:

“’One foot on the dock, one foot on the boat’” is never a sustainable position to be in. But the energy market is now in the midst of some major sea changes -- the electrification of transportation, behind-the-meter energy systems killing the utility business model, and of course solar and wind becoming more cost-competitive versus fossil fuels, to name just a few. And so most of the large incumbents in this sector find themselves in that uncomfortable straddle right now – keeping their core business going strong amidst a changing marketplace, while innovating for the next big thing. GE has been straddling this divide for years, and now it’s no longer just an industry secret. And GE is not the only energy giant to grapple with these challenges. If the history of such industry sea-change periods is a guide, many of today’s incumbents will lose the battle and fade.”

If Day’s assessment is true, and there’s good reason to believe that it is, investors and energy companies alike would be well-served to devote their resources to innovative, forward thinking companies prepared to handle a changing energy landscape. With our focus on versatile, adaptable power systems and controls made to run in a world increasingly built around renewable energy, IEM Power Systems is proud to be among the companies best equipped to be a leader in the new energy world.

About IEM

IEM is the largest independent full-line manufacturer of electrical distribution and control systems in North America. The Company has developed one of the most sophisticated electrical product manufacturing systems in the world and has cultivated partnerships with leading component suppliers resulting in optimal solutions to customer problems.

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