–
The new management of General Electric (GE) thus breaks with the king’s idea of the company’s former top manager Jack Welch, that a large diversified conglomerate is the best company model.
During his two decades as GE’s CEO, from 1981 to 2001, Welch revolutionized the company with new business models and relentless downsizing, much to the delight of shareholders who had their values multiplied. His brutal leadership style earned him the nickname “Neutron Jack”, after the neutron bomb, because he eliminated the workforce and left the factory buildings untouched.
Former General Manager Jack Welch of General Electric (GE) (Photo: Peter Foley / Bloomberg)
The three new companies
This will be General Electric’s three new companies:
- GE Aviation – GE’s current aviation division, is scheduled to be a separate listed company from early 2023.
- GE Healthcare – GE’s current health division, is scheduled to be a separate listed company from early 2023. GE will retain an ownership share of 19.9 percent.
- GE Renewable Energy and Power – which will combine today’s energy and renewable divisions and digital investments, is planned to be a separate listed company from early 2024.
The company states that the time leading up to the split will be used, among other things, for operational improvements in sustainable operations, as well as to reduce the company’s debt.
–
The GE share has fluctuated a lot in recent years, and most down in the last four to five years. The share price is today at the same levels as a decade ago.
Smaller and faster
GE’s goal is for all three new companies to become market leaders in their respective areas. By splitting the company, the current management, led by CEO and chairman Larry Culp, believes that attention to good and profitable operations will be raised, and that the management of the respective companies will be held more responsible for the results. He also believes that this will benefit customers, through the companies getting closer to the end market and consumers’ needs.
General Electric-sjef Larry Culp.
(Foto: Alwyn Scott/Reuters/NTB)
GE also believes that a split into smaller companies will provide greater flexibility and the ability to turn around more quickly in the pursuit of profitability and good business opportunities.
– This is a defining time for GE and we are ready. At GE, we have always been very proud of our goal of building a working world. The world demands, and deserves, that we do our best to solve the biggest challenges in aviation, health and energy. By forming three industry-leading global companies, each of which can benefit from sharper focus, tailored capitalization, and strategic flexibility to drive long-term growth and value creation for customers, investors and employees, Culp said in a statement Tuesday morning US time.
Larry Culp has led General Electric since the autumn of 2018. He is the first in the company’s 129-year history who has not been recruited from the company’s own ranks, but was brought in from outside to lead General Electric.
GE shares are up nearly eight percent in pre-trading on the New York Stock Exchange on Tuesday.(Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We want you to share our cases using a link, which leads directly to our pages. Copying or other use of all or part of the content may only take place with written permission or as permitted by law. For additional terms look here.
–
