Power Failure: The Rise and Fall of General Electric

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He used new management techniques to improve productivity. He used loopholes to avoid major tax bills, gifted to GE (and other corporations) by the Reagan Administration. The lax oversight that would allow GE to become a sprawling conglomerate was not in evidence in the 1930s, as GE had to spin off RCA because of monopoly concerns. (The company later bought it again when the government calmed down about monopolies). The dramatic rise—and unimaginable fall—of America’s most iconic corporation by New York Times bestselling author andpre-eminent financial journalist William D. Cohan JANE MAYER,author of Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right

GE's decline accelerated during the Great Recession, as the financial crisis revealed it to be overstretched.The young GE had advantages that had an expiry date. It was given license to collude with British Marconi to control and protect hugely valuable patents in the US market. It was permitted to collude with competitors over supplies for building out the electric power infrastructure.

The once-titanic company is now rushing to find solutions to its compounding problems. A big challenge for Culp: narrowing GE’s leverage from five times net debt-to-Ebitda, as calculated by CreditSights, to a target ratio of 2.5. Over the past four months, the cost to protect GE’s debt against default for five years has nearly tripled. While that doesn’t suggest imminent default, the increase suggests that concerns about the company’s finances have intensified. MARK SEAL, author of Leave the Gun, Take the Cannoli: The Epic Story of the Making of The Godfather A sweeping tale of ambition, arrogance, egos, and feuds—and how they brought down a once-great company. At times, it was a bit hard for me, as a former CEO, to read such harsh criticism of fellow leaders, including people I know and like. But I got a lot out of reading this book. Gryta and Mann gave me the detailed insight I was looking for into the culture, decisions, and accounting that eventually caught up to GE in a gigantic way. One epiphany: Have the engineers designing critical aircraft parts turn their attention to the manufacturing equipment. “We actually designed that fixture with the same care that we designed the part,” he said. “It was like it never made a bad part after that... We really went after it in a really big way, which is the way GE does.”

At this point I must declare my interest. I have been and am a long-term GE employee. Not by choice, I may hasten, since the company around me was bought. However, as a relative outsider, I feel I am in a good position to reflect how some of the events in this book are described.

This article, originally published in 2019, was republished on Nov. 9, 2021, when General Electric Co. announced that it would split into three separate companies. GE plans to retain its aviation business while spinning off the health-care and energy operations by early 2024. Probably a bit of all of these issues are at play but the story is a complex one and it is hard to pinpoint the time when the world appears to have passed GE by. One key mistake was his decision for GE to invest in a subprime mortgage business, the foolishness of which became apparent when the 2007-2008 financial crisis hit, spurred in large part by bad debt and irresponsible loans. Another was that as the crisis began to unfold, people tried to convince Immelt to start getting rid of GE’s real estate interests, but he wouldn’t listen. He wanted to keep taking the risks (and reaping the rewards).

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GE came about due to the failure of Edison's generating interests, a forced merger of competing electrical generating companies forced by banks and financial interests to attempt to monopolize electricity in the US. Edison, although a board member, of the new company, hated the forced marriage and had virtually no involvement.