GE GE Aerospace

By Tom Gryta and Ted Mann 

Reader response to The Wall Street Journal's article about General Electric Co. zeroed in on one painful truth: There is plenty of blame to go around for the unraveling of the last great American conglomerate.

We received hundreds of emails and messages from employees, retirees and investors and others who have followed the company for decades and been pained by its recent troubles. They are divided about whether GE can regain its lost glory, but they agree that its leaders, including former CEOs Jack Welch and Jeff Immelt, share the blame for what has become of it.

"There was far too much emphasis on the cult of leadership at GE," wrote John Sutton of Boston. "Jack Welch retired with a far-too-generous severance package, which set the stage for the coronation of Jeff Immelt. Immelt began to believe his own press releases and GE suffered."

Larry Marion of Newton, Mass., wrote: "Neutron Jack Welch opining that his strategy of only being one, two or three in any of its markets was a smart idea but led to abuse and failure. Cult of the CEO hurt the company."

Others blamed the company's board of directors.

"Board complacency is a clear causative factor. Directors did not challenge the GE CEOs adequately, Immelt in particular," wrote Ken Dredge of Coolum Beach in Australia.

"GE's board during Immelt's tenure was abysmal," wrote Henry D. Wolfe of Chicago. "Ed Garden, from Trian, who only joined in 2017, and Jonathan Tisch were the only two directors with capital allocation skills and track records, which is a must in any company but especially at a conglomerate."

"In the extreme, the GE board is the poster child for the current public company governance model which is not designed to optimize the allocation of capital," Mr. Wolfe added. "This governance model failure is the real story underpinning the GE devolution."

Many readers pointed to GE's expansion into financial services for its current problems.

"GE Capital shifted the company's focus away from being an industrial company built on strength of operations and strategy. That killed them," said James F. Prevost of Lake Bluff, Ill. "They should be able to reconstitute as a smaller, leaner company."

Ed Fitzgerald of Pottstown, Pa., agreed. "Great company in the 70's and 80's when they were focused on manufacturing and using GE credit to finance vendors that supported their business," he wrote. "Downfall started in the 90's when GE Capital was used to trade businesses but not develop them. 2000 to 2015 was getting into businesses that never made sense for GE."

John Briggs, an engineer in Vancouver, Wash., said he was a longtime customer of GE's industrial power distribution equipment. "They invested large amounts of effort into engineering and selling their products. Things changed sometime in the late 80s or early 90s when they lost interest in this business and became more of a financial company," he said. "Since that time most of our business went elsewhere, much of it overseas."

Many GE alumni recalled with pride their work at different parts of a company that made everything from electric toasters to nuclear reactors.

Harold Paustian, a retired GE nuclear engineer who worked in San Jose, Calif., and now lives in Big Lake, Minn., said, "Although GE didn't always have the best performing stock or pay the best, the employees were highly motivated with high integrity. I hope GE can fully recover!"

"I started my career there and stayed 15 years when Jack Welch was in charge. He was an incredible leader who drove communication from the top to every employee," said Wendy Peters of Bluffton, S.C. "I took many of my learning and experiences around leadership development with me when I changed companies. It is so incredibly sad to me to see what has happened at GE recently."

WSJ readers aren't giving up on GE. Of the 1,383 people who responded to an online survey before the article was published online Friday, more than half said they believed GE can make a comeback.

"I have full confidence that the GE brand, culture, and leadership will guide the ship back on course in the long-term," wrote Andrew Draper of New York City. "But no doubt they will need to go through this period of pain before the outlook starts to improve."

"As much as anyone outside the company claims to have a view on our future story, or influence over it, it can only be written by those of us still here," wrote Jason Forget, a third-generation GE employee in Schenectady, N.Y. "This story is far from over, and I'm excited by the opportunity to see how the chapter that I write impacts the next revolution of our company."

Many individual shareholders expressed shock that a company they considered so important to the U.S. economy and so safe could be in such dire condition.

"As a benchmark blue chip for so many decades, I never could have imagined the rapid demise of GE in such a short timeframe," said Craig Brodbeck of Lancaster, Pa. "With a similar situation with Westinghouse, what would two titans of the 19th century -- Thomas Edison and George Westinghouse -- have to say about their business legacies? It makes me wonder which stalwart will falter next."

Mitch Morrison of Passaic, N.J., said a relative gave GE shares as a present when his son was born 19 years ago. The gift included a note describing GE as a very sound company that would be around even longer than his grandchildren.

"The note made sense at the time. GE has been around seemingly since the formation of the industrial revolution," Mr. Morrison wrote. "It's become increasingly clear the company that brought good things to life has sadly brought some good things to their demise. Hope we're not seeing their epitaph but perhaps we are."

Join WSJ journalists in a live subscriber-only call on what happened at GE, how they got the inside story, and what it all means, Tuesday Dec. 18 at 1:00 p.m. ET. Register at wsj.com/gecall, and send your questions on GE to subscribercall@wsj.com.

Write to Ted Mann at ted.mann@wsj.com

(END) Dow Jones Newswires

December 17, 2018 08:14 ET (13:14 GMT)

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