Foss: GE is in serious trouble


Maybe General Electric really is in trouble. 

Until now, I’ve greeted every ominous news report about GE with something akin to a shrug. 

I could see that GE was struggling, but I believed the company would figure out how to right the ship. My belief was based, in large part, on the fact that GE is GE — one of the most successful companies in the history of the world, and an iconic American business. 

In hindsight, I should have known better than to shrug away the stream of ominous news reports about GE’s finances. 

No company is immune to failure, and the latest bad news about GE — the company was booted from the blue chip stock index — suggests that it really is time to reconsider the company’s place in the world. 

You are what your record says you are, and in recent years GE’s record has been downright bad. Being kicked out of the illustrious Dow Jones Industrial Average simply affirms this, symbolizing the company’s fall from grace. 

And it’s been a swift fall. 

It was just two years ago that New York and other states engaged in a bidding war for GE’s new headquarters, with the company eventually opting to move to Boston in exchange for $120 million in state grants and $25 million in property tax breaks. Just to give you an idea of how the company was perceived at the time. 

Would Massachusetts still offer GE such an eye-popping deal?

It’s possible — states tend to lose all sense of proportion when wealthy CEOs talk about job creation and local investment. But I get the sense, from reading the Boston Globe, that some are questioning whether the deal will ever pay off. 

“Feeling nervous about the future of General Electric?” Globe business columnist Shirley Leung asked readers in November. … “Now, I can’t help but wonder, did we get sold a lemon? Instead of Boston being the place where GE rose from the ashes, will we be known as the site of its final resting place?” 

Leung notes that the Boston business community loved former General Electric CEO Jeff Immelt, but you have to wonder whether that’s still true in light of the steady drumbeat of bad news about the company. 

As GE’s new CEO, John Flannery, works to rebuild and restructure his company, Immelt’s tenure looks increasingly disastrous.

The Wall Street Journal even went so far as to suggest that Immelt’s “success theater” — a history of selectively positive projections, a culture of overconfidence and a disinterest in hearing or delivering bad news — served to mask “the rot” at GE. 

Well, the mask is off, and what lies beneath isn’t pretty. 

GE has lost almost $140 billion of market value in the past year, according to Bloomberg, “spurring a plan to shed $20 billion of assets in a bid to realign businesses and cut costs as the company grapples with debt challenges and flagging demand.” 

In a rapidly changing world, it’s easy to be cynical about GE’s ability to reinvent itself and emerge stronger than ever. 

On Twitter, the conservative commentator Erick Erickson responded to news of GE being exiled from the Dow by saying, “The world has changed and moved on.” 

And yet. 

I still believe in GE. 

The company has been so successful, for so long, that reinvention isn’t out of the question. 

Indeed, it’s a real possibility. 

The General Electric of yesteryear is in dire shape. 

But that doesn’t mean something new and vital can’t take its place. 

Reach Sara Foss at [email protected]. Opinions expressed here are her own and not necessarily the newspaper’s.

Categories: Opinion, Schenectady County

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