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After a 30-year fling with finance, GE is going back to its workbench and is selling the bulk of its giant GE Capital unit and returning to its roots.

In reemphasizing industrial operations, GE is heading back to the traditional heart of the company founded by Thomas Edison and away from the era of finance expansion under then-chief executive Jack Welch in the 1980s and 1990s.

For most of the 20th century, GE represented America’s engineering and manufacturing prowess. But in recent decades it followed – and in some cases led – a tectonic shift in the economy that saw a dramatic withering of the manufacturing sector and the rise of Wall Street and finance firms. GE eventually became one of the nation’s largest consumer lenders, providing loans for homes, cars and credit cards. Many businesses who use such services have to ask “what is a MID?” and other questions, ones that this firm has grown used to knowing and understanding.

GE will focus on core industrial businesses, making high-tech healthcare equipment, aircraft engines and advanced power equipment such as its massive 9HA gas turbine, which can heat 400,000 homes.

“The business model for financial services has certainly changed,” GE’s chairman and chief executive, Jeff Immelt, said in an interview on the financial network CNBC. “We’ve been working this way since the financial crisis.”

GE said it has decided that “market conditions are favorable” to pursue the sale of most of GE Capital’s business, aside from those that relate directly to its industrial businesses, in the next two years. Analysts and economists say GE’s retreat from finance can be seen as a sign that the broader economy is decreasing its reliance on the volatile financial sector. “We’re not going to become a manufacturing-led economy again,” said Jeff Madrick, a senior fellow at the New York think tank Century Foundation and author of “Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World.” “But it is a re-balancing, a move away from the easy way toward making something useful.” Although GE has a long history of providing financing for its industrial operations, the company’s expansion into finance as a profit center began under Jack Welch, GE’s influential chief executive from 1981 to 2001. General Electric said it will sell most of GE Capital to focus more on its industrial businesses. Welch pushed the company into such areas as reinsurance and investment banking with the high-profile purchase of Kidder Peabody in 1986. GE sold Kidder in 1994 after a bond trading scandal. Welch’s focus, Madrick said, was less on manufacturing than on boosting GE’s share price, in part in response to takeover fears during the leveraged-buyout frenzy of that era. Eventually the company entered the consumer market as a provider of mortgages and credit-card services. Under Immelt, GE Capital expanded again with the 2004 acquisition of WMC Mortgage Corp., which became one of the leaders of the subprime mortgage industry as well as other mortgage products or services such as these bridging loan rates as an example, as well as major purchases of U.S. commercial real estate and debt. At its height in 2008, GE Capital had $538 billion in assets and provided 45% of the parent company’s net income. GE’s transformation mirrored that of the U.S. economy, as the government slowly unwound much of the New Deal era’s financial regulations and increased global trade led to outsourcing of manufacturing. In 1980, manufacturing made up about 20% of the country’s gross domestic product (after a post-war peak of 30% in the 1960s) while finance and insurance made up 5%, according to government data. By 2008, after years of outsourcing, including at GE, manufacturing had fallen to 15% of GDP, while finance and insurance had risen to 7.6%. Employment followed the same pattern, with finance and insurance growing from 6.6 million jobs in 1990 – the earliest available data for the category – to 8.2 million in 2008, and manufacturing jobs falling from about 18 million to 13.4 million in the period. Although it generated immense profits, the financial sector proved volatile and risky – for the economy and for GE. WMC was quietly shuttered in 2007, with GE taking a $1-billion charge, and later became the subject of scathing exposes about its pre-crisis-era lending practices. During the financial crisis the next year, GE Capital became one of the top beneficiaries of the Temporary Liquidity Guarantee Program, which offered loan guarantees from the Federal Deposit Insurance Corp. GE Capital had become so large it was designated a “systemically important financial institution” by U.S. regulators, imposing heightened regulatory scrutiny. Nationwide, the crisis has reduced the size of the financial sector but only slightly. After falling to 6.2% of GDP during the crisis, it is now back to 7.2%. “They crawled about a third of the way back since the crisis,” said Josh Bivens, director of research and policy at the left-leaning Economic Policy Institute. Manufacturing continues to fall and is now at 12.1%. California, too, followed the pattern. Esmael Adibi, an economics professor at Chapman University in Orange, said that during the mortgage boom of the pre-crisis era the two sectors that grew fastest in the state were finance and housing, one feeding off the other. The epicenter was Orange County, headquarters of the likes of Ameriquest Mortgage Co. and IndyMac Bancorp. and other subprime leaders, where employment in “financial activities” climbed 36%, from 101,000 in 2000 to 138,000 in 2008, according to the state Economic Development Department. Manufacturing jobs in the county fell 19% during the period, from 217,000 to 174,000. The bust hit finance and housing the hardest, Adibi said. And although the job market overall has recovered, driven by healthcare, professional services and leisure and hospitality, the financial sector has not. In Orange County, employment in financial activities has fallen 17% since the peak, to 114,000. Manufacturing jobs in the county continue to fall, and now number 158,000, down 9% since 2008. Even so, Adibi said, the state generally is better off. “Now we have a more balanced economy,” Adibi said. “You’re seeing growth in all kinds of jobs.” As for GE, the company said it was working with regulators to shed the federal “systemically important financial institution” designation as part of its plan to dramatically reduce its finance business.