SCHENECTADY — Jack Welch, revered and reviled for his leadership of General Electric, died Sunday at age 84.
Welch's 1981-2001 tenure as CEO was marked by stunning growth in revenue and stock value along with a veritable snowstorm of pink slips as business units were sold off or shuttered and tens of thousands of employees fired.
In 20 years, GE's value rose from $14 billion to $410 billion as Welch diversified the company away from manufacturing. Nearing retirement, he'd be dubbed “Manager of the Century” by Fortune magazine.
He also held that any GE entity that wasn’t No. 1 or No. 2 in its field should be fixed, sold or closed, and that the bottom-performing 10 percent of management should be sacked each year. In the first 15 years under his leadership, employment in Schenectady, GE’s historic home and birthplace, fell by more than 70 percent, from 24,000 to 6,700.
Comments Monday on the "Schenectady History" page on Facebook were running about 8-to-1 against Welch, some with strong or even hateful language. One commenter called him horrible, another said he was a fascist, another suggested that the worms in the cemetery where he’s buried would unionize.
In an admiring Tweet, President Trump called Welch a friend and business partner using a nickname — Neutron Jack — that Welch himself didn’t like but which was a good metaphor.
The enhanced radiation weapon, or neutron bomb, that the U.S. military began acquiring around the same time Welch became CEO was designed to release high amounts of radiation with a limited blast, leaving buildings standing but killing the people in them. Welch’s policies left empty buildings in Schenectady and many other cities, though some were later demolished and tax costs reduced accordingly.
“One year there were like 6,000 jobs that left Schenectady at the main plant,” recalled Al Jurczynski, a city councilman and then mayor through much of Welch’s tenure as CEO who had an often adversarial relationship with the company because of the cuts. “I lived through that in the 1980s.”
But during the same period, GE employees who bought or were given stock — and there were thousands in the Capital Region — did very, very well for themselves as GE became the most valuable company in the world.
“It was good for the employees that had the stock options, management, retirees at the time,” said Chris Hunter, vice president of collections at miSci, formerly the Schenectady Museum. “If you were able to keep your job you were pretty well off.”
But the bottom later fell out for shareholders, just as it had for all those who were fired.
A single share of GE stock could be purchased for $1.31 at the start of 1972 — the year a chemical engineer named John Francis Welch Jr. became General Electric’s youngest vice president. When Welch retired as CEO in September 2001, that single share of GE stock had become 48 shares, thanks to a series of splits; on the first trading day of September 2001, each share was worth $40.83.
It would later plummet as low as $6.71 in December 2018. The stock has since rebounded but is nowhere near its Welch-era peak — it closed at $11.21 Monday.
There’s still debate in the financial industry whether Welch left a timebomb for his hand-picked successor, Jeffrey Immelt, or whether Immelt destroyed the greatness Welch had built, but when Immelt left in 2017, the company was in deep financial trouble.
In the Schenectady region, anger is pointed heavily at Welch, specifically his Neutron Jack persona.
“I realize one must be charitable when someone dies but I can't help but remember in the early ’80s Welch had a heart attack and when the news went around headquarters, many would say: ‘What! I didn’t know he had a heart,’” said Mary Kuykendall, a retired longtime GE employee and self-published author of "Rebuilding the GE House Jack Blew Down: 40 Years of Chutzpah and Sick Humor at GE.”
“It was no surprise Trump would tweet that ‘Neutron Jack’ was his friend and supporter. They are both alike: arrogant, mean-spirited and only interested in enriching themselves. After turning GE into a financial company by selling off manufacturing and technology businesses to finance it and even buying companies like Montgomery Wards to harvest and ruin, we saw the final result in 2008. Few think what is left of the company can survive because it was so starved of plant and equipment investments.”
As a historian, Hunter can appreciate the human impact in communities like Schenectady (and Pittsfield, and Utica, and all the other GE company towns that are no longer GE company towns). He also recognizes that the company needed to change in 1981.
“Welch was brought in to create a new corporate culture at GE, leaner, much more nimble,” Hunter said, after the board of directors recognized GE couldn’t survive as an industrial company. “Schenectady was symbolic of that industrial company. Pittsfield too.”
GE’s main competitor in 1981 was Westinghouse, he noted, and by 2001, when Welch retired, Westinghouse existed in name only. “So GE could have gone that way.”
Welch was a regular but not frequent visitor to Schenectady, Hunter said, attending meetings here and sometimes showing up unannounced to catch people off guard and unprepared for him.
Hunter said he visited GE’s headquarters in Fairfield, Connecticut, a few times and corporate librarians told him Welch was one of the guys, working out in the gym and greeting people on a first-name basis in the corridors.
“We didn’t really get to see a whole lot of the charismatic side of him here in Schenectady but it was definitely there down in Fairfield.”
Joseph and Marguerite Jurczynski raised the future mayor and seven other children on the salary Joseph made as a second-shift production worker at the Schenectady plant. The couple did well with stock that soared in the Welch era, and two of their sons became GE engineers.
“I grew up with a tremendous amount of pride and respect even though I never worked a day for GE,” Al Jurczynski said.
He recalled getting out of the Army in the late 1970s and driving home along Interstate 890, where parking lots came almost up to the road at one of the largest industrial sites in the Northeast.
But the company’s presence at the foot of Erie Boulevard already was far less than its unsustainable World War II peak, and more big cuts were just around the corner.
“Jack Welch came in, there was blood all over the place,” Jurczynski said. “This morning, [Fox Business Network anchor] Maria Bartoromo was singing the praises of Jack Welch. I can see why business types would say that.
“There’s a lot of good things that happened because of GE and a lot of things that Schenectady took on the chin … The fact that Schenectady is still on its feet is testimony to what a great city it is.”
In an attempt to return the company to profitability, current CEO H. Lawrence Culp Jr. is slashing GE's size and scope at a rate worthy of Neutron Jack, reducing the workforce by 78,000 people in 2019 alone by selling off several businesses.
Today, General Electric says it has about 4,000 employees in The Capital Region. Subtracting those working in Niskayuna and North Greenbush, who almost certainly total more than 1,000, there are likely fewer than 3,000 people still employed at the sprawling campus at the foot of Erie Boulevard.
The pavement on that huge parking lot Jurczysnki remembers near I-890 was stripped off long ago and is now an expansive field of grass.
FACTS ON JACK
Here are a few facts about Jack Welch, General Electric’s best-known leader since Thomas Edison:
- John Francis Welch Jr. was born in Nov. 19, 1935, in Salem, Massachusetts, and earned bachelor’s, master’s and doctoral degrees in chemical engineering by 1960.
- Welch joined GE’s Plastics Division at its Pittsfield, Massachusetts, plant in 1960 and was nearly fired after a lab explosion in 1963; in 2006 he would be inducted into the Plastics Hall of Fame for his work in the development of Noryl in Pittsfield.
- Welch became GE’s youngest vice president in 1972 and was named vice chairman in 1979; in April 1981 he succeeded Reginald Jones as GE’s eighth chairman and CEO.
- Welch retired in September 2001, having engineered a $396 billion jump in GE’s value; his retirement package later revealed to be worth $417 million, which was widely criticized as excessive even in the era of lucrative golden parachutes for executives.
- Welch’s post-GE career included writing and speaking on business and management, and a series of best-selling books, some co-authored with third wife Suzy Welch.
- Welch died March 1, 2020, of kidney failure.