Our Rail Optimization Solutions help railroads move freight faster and more cost-effectively. The RailConnect Transportation Management System and Movement Planner System help railroads analyze critical information in real time to plan and optimize business outcomes, operations and asset utilization. These intelligent solutions deliver real efficiencies: Norfolk Southern, a major Movement Planner customer, estimates that every 1 mph increase in network speed saves an estimated $200 million in annual capital and operating expenses. In 2012, we expanded our Optimization Solutions portfolio by acquiring RMI, a leading supplier of transportation management systems used by railroads across North America to manage operations, improve information flow, increase productivity and reduce cost.
Last year, we set focused execution goals for GE: double-digit industrial earnings growth; margin expansion; restarting the GE Capital dividend to the parent; reducing the size of GE Capital; and balanced capital allocation. We achieved all of our goals for the year.
In 2012, our industrial segment earnings grew by 10% to $15.5 billion. Our industrial segment organic revenue growth was 8% and margins grew by 30 basis points, both metrics comparing favorably to peers. Growth was broad-based; all of our reported segments grew earnings for the first time since 2006. We finished the year with $210 billion of backlog, a record for the Company.
We grow our industrial businesses by pulling the same “levers.”
Oil & Gas is our fastest-growing business, with revenue of $15 billion and earnings growing 16%. We compete in high-growth markets. We are investing to launch new products fully utilizing our broad technical capability. For instance, we launched the first subsea compressor at Statoil, creating an industry-leading position. Our orders grew by 16% in the year, and we are winning new business around the world.
Our Power & Water business grew earnings by 8% in 2012, and we expect to be about flat in 2013. We are well-positioned for long-term growth in natural gas power generation, distributed power, and services. However, Wind power generation—where GE leads—is more volatile. We had a very strong year in 2012 but, due to U.S. regulatory uncertainty, this year will be difficult. Based on strong global demand with expanding service, we expect Power & Water growth to resume in 2014.
Over the next few years, we see earnings upside by improving our performance in markets like Energy Management. This business is complementary to our core infrastructure franchise, yet our share is less than 10% and our margins are lower than those of our competitors. We are seeing outstanding opportunities for growth in power conversion and digital energy.
We expect another year of strong industrial performance in 2013. Oil & Gas, Aviation, Healthcare and Transportation should hit “all-time-high earnings” in 2013. Our plan targets 10% industrial earnings growth.
GE Capital had earnings of $7.4 billion, up 12%. Our Tier 1 common ratio is 10.2%, well above the regulatory goals. GE received a $6.4 billion dividend from Capital. Our team has done a great job of reducing commercial real estate exposure, which was $46 billion at year-end, down 50% from its peak. GE Capital continues to outperform regional and money center banks in important areas like net interest margins and losses.
The “core” of GE Capital is being a leading lender to middle market customers, building on our deep experience in, and understanding of, these markets and assets. In businesses like sponsor finance, aircraft leasing and retail services, and middle market lending and leasing, GE Capital has deep domain experience and will continue to grow.