When GE chose a new CEO in 1972, it did not pick someone likely to renew the company. Instead, it chose a man best known for retreating. That new CEO, Reginald Jones, was born in England in 1918, the son of a steel mill foreman. He emigrated to the U.S. as a boy, completed college there, and went on to earn an M.B.A. from the University of Pennsylvania's Wharton Business School. He joined GE in 1939. He completed the company's select Financial Training Program, then rose rapidly, eventually becoming Vice President for Finance. Along the way, he developed a polished appearance and aristocratic manner more suggestive of the landed gentry than of his working class origins.
On one early major assignment he handled the financial aspects of GE's retreat from its mercury turbine project. He learned that as the prospects for the turbines had gone down, the price of mercury had gone up. So much so that money paid for mercury extracted from the decommissioned turbines provided an unexpectedly lucrative consolation prize. Later, after rising in management, he was one of the Three Wise Men who guided GE's 1970 retreat from computers. Again, he found an advantageous financial angle. It involved taking payment in Honeywell stock and then taking advantage of related tax loopholes. Again it eased the sting of business defeat. Jones was not, however, chosen CEO in 1972 for the purpose of supervising more retreats. It was Business Week magazine that explained Jones' selection correctly. Jones, it said "vaulted to the top spot because of his knowledge of strategic planning." (560)
Jones would, however, be best remembered in GE not for a planning triumph but for a personnel action. Early in his term, in preparing a CEO succession list, he reached down the organization chart and added the name of a man his Advisory Council thought too young to be CEO. When Jones departed in 1981, he would pick as his successor that late addition to the list, 45 year old Jack Welch. Those two CEOs were, while in office, showered with adulation. The first was touted as as America's most influential Jones, the second as CEO of the century. (Only in the next century would Welch's capsule description be changed to "the man who broke capitalism." )They were indeed very different leaders. Jones led ethically and cautiously. Welch responded boldly and unconventionally, raising questions about his business and personal ethics. Both, however, did more responding to the economic constraints of the 1970s and 1980s U.S. than crafting Chandlerian strategies.
Why, after a century of still robust health, did Welch put an end to the Old GE? How did that ending matter to the wider world? Those are the questions this chapter answers.
In 1972, when Jones took over, times were stormy. National headwinds included the emerging Watergate scandal, a turn of the U.S. economy from a decade of prosperity to a decade of stagflation, the beginnings of an energy crisis, and the winding down of the disastrous and divisive Vietnam War. Like previous wars, Vietnam had offered GE good growing weather. Aircraft Engines and the weapons portion of GE Aerospace had particularly benefitted. Sales of GE's main military turbojet of that era, the J79, would total 74,000 engines.
Unlike previous wars, however, Vietnam also generated vocal opposition within GE. At the GE Research Lab, for example, there emerged in 1970 a chapter of Scientists Against the War. Among its leaders was one of the company's most distinguished scientists. As an astrophysicist, Ralph Alpher had in the late 1940s been an pioneer of the Big Bang theory of the the universe. At GE's Research Lab in the 1960s he had explored a futuristic energy generation idea called magnetohydrodynamics. Now, in the early 1970s, he stood in protest demonstrations on the traffic circle outside that lab. He appeared on national TV along with other prominent anti-war scientists. He was subsequently summoned before a company VP. There he did not encounter the expected rebuke. Instead, the two took part in a respectful dove vs. hawk discussion. Neither mind was changed. (561)
As that war limped toward its end, GE Aircraft Engines was finally making its own transition from war to peace. This transition was initially powered by a contract to put GE's CF6 turbofan on one particular highly visible Boeing 747 — the U.S. President's Air Force One. In 1974 KLM Dutch Airways followed by becoming the first airline to select a CF6 for a Boeing 747. By the end of the 1970s, GE CF6 engines were on nearly 400 commercial airliners owned by more than 50 airlines worldwide. GE was pulling even with Pratt & Whitney in the contest for #1 engine supplier. It had taken 30 years to reach commercial airline engine profitability. Only the government funding provided by its military jet engine business had enabled this long stretch of very expensive patience.
GE Nuclear also initially seemed in 1970 to at last be sailing before favorable winds. Annual BWR orders reached double digits by 1972. The arrival of a 1973 storm seemed not to disrupt, but further to propel, nuclear power. That storm was the 1973 oil crisis. The embargo of Middle Eastern oil imports left Americans waiting in long lines outside gas stations. The problem was erroneously depicted not as a specific and temporary oil shortage, but as a general and long term "energy crisis". What could fix that crisis better than clean, convenient, and wholly domestically produced nuclear power?
The answer, quickly and surprisingly, became — almost anything else. In just a few years, the previous nuclear advance would become first a retreat, then a rout, and finally a moratorium.
Anti-innovations, like innovations, are carried out by a repertory company of scientists, engineers, consultants, customers government regulators, the public, the media and more. The full story of nuclear's anti-innovation is complicated. Neither of the two popular simple answers suffices. Nuclear was not simply murdered by the exaggerations and unscientific "nuclear fear" of environmentalists and anti-capitalists. Nor, however, did nuclear simply commit suicide, betrayed by the cost overruns, exaggerated promises, and cover ups of the reactor manufacturers, utility executives, and their captive Federal regulators. (562)
That 1970s retreat from nuclear power was described from the GE perspective in 1982 by the then manager of GE's Nuclear business, Warren Bruggemann. "The oil embargo of 1973," he said,
was misread by the nuclear industry, which had expected nuclear energy to be the panacea. But the cost of electricity shot skyward and conservation became a byword. The political climate turned hostile. The bottom of the nuclear market fell out. (563)
A 1984 study by the U.S. Office of Technology Assessment would conclude that nuclear power in the U.S. was " unlikely to be expanded" for at least the rest of the 20th century because nuclear plants
present too many financial risks as a result of uncertainties in electric demand growth, very high capital costs, operating problems, and increasing regulatory problems. (564)
Much of what happened to nuclear was outside GE's control. For example, in 1971 the Supreme Court ruled that nuclear reactor approval required a full Environmental Impact Statement. This significantly lengthened the time from proposal of a reactor until its operation. Since reactors were built with borrowed money, this extra time translated into higher costs.
Another influence beyond GE's control was the entry into the fray on the anti-nuclear side by knowledgeable scientists. They entered via such organizations as the Union of Concerned Scientists and the Scientists Institute for Public Information. They brought public attention to problems ranging from thermal pollution of rivers and lakes by nuclear plants to the still-unsolved problems of reprocessing or storage of spent nuclear fuel.
One important issue stemmed from one way a nuclear steam boiler differs from a conventional steam boiler. When a conventional boiler's fire goes out, the fuel quickly cools off. When a nuclear "fire" goes out, the nuclear fuel stays hot much longer. Suppose, for example, that a power plant was struck by an accident such as an earthquake or tsunami and was shut down. Under such condtions, a conventional boiler's fuel would cool off without doing any further damage.
In a nuclear reactor, by contrast, an accident such as an earthquake might cause a break in a pipe that supplied water to cool the nuclear core. In that case, the nuclear fuel might stay hot long enough to melt its way through the steel reactor vessel, and down into the ground. The popular term attached to such an event, initially as a joke, was "the China Syndrome" (that is, melting all the way through the earth to China). This massive exaggeration provided potent anti-nuclear propaganda, including the title of an anti-nuclear Hollywood movie.
Though the publicity was vastly exaggerated, there was a genuine underlying problem. The melting of a reactor core could cause the release of radioactive materials into the air or water. The possible number of deaths that might result was estimated by responsible expert studies such as the AEC's 1970 Rasmussen Report, to be as high as thousands. The possible dollar costs extended up into the billions. To prevent such consequences, GE had in the 1960s developed the Emergency Core Cooling System (ECCS). In the event of an accident such as a pipe break, the ECCS would flood the nuclear core with water. This would keep the core cool enough to prevent a meltdown.
GE's proposal of this solution was controversial. Initial experiments on a small scale test reactor at the AEC's Idaho test facility, supplemented by computer models proved ambiguous. Effective interrogation of the AEC by opponents from the Union of Concerned Scientists fed public suspicion that the Atomic Energy Commission, in its dual role of both nuclear power promotion and nuclear power safety assurance, was allowing the promotion role to overpower the safety role. This led in 1973 to the splitting off the safety role as a separate agency, the Nuclear Regulatory Commission (NRC). To GE's relief, its ECCS solution, as revised and improved by knowledge gained over many years of small scale experiments and computer simulations, was ultimately accepted in 1973 by that newly created NRC. It would take nearly 40 years for the GE ECCS to get its first full scale live test. (565)
That test followed the 2012 earthquake-caused tsunami that struck Japan. The GE BWRs operating at Fukushima, Japan shut down. The ECCS did initially cool the reactor cores. That ECCS, however, depended on electric power to run its water pumps. The quake and flooding knocked out both the normal electricity supply and the diesel generators supplying emergency power. Only heroic improvisation by local personnel prevented the disaster from spiraling out of control. The damage that did occur has already cost billions of dollars, and will continue to cost billions more. It caused the evacuation of hundreds of square miles of Japan. As for human life, the web site Our World in Data provided in 2023 the following summary
No one died directly from the disaster… 40 to 50 people were injured as a result of physical injury from the blast, or radiation burns… one worker has since died from lung cancer… for local populations, there appears to be no increased risk of cancer or other radiation-related health impacts.
Fukushima proved to be the one serious accident encountered by a GE BWR in the first 60 years since the first one went into operation at Dresden, IL in 1960. That rate of one accident per some 3000 reactor years years is more than the expected rate of less than one accident per in 10,000 reactor years projected in that Rasmussen Report. On the other hand, the record of extremely low level of death and injury from nuclear power stands in sharp contrast to, for example, the vastly higher level of coal related death and damage.
Nuclear's safety record reflects the dedicated, responsive, and effective effort to assure the safety of nuclear reactors made by GE and its competitors. Where those reactor manufacturers can be criticized is in their rushing this technology into action between 1960 and 1970 before its complex characteristics were fully understood. That impatience led to massive cost overruns as the ECCS and many other environmental and safety fixes were added to licensing requirements. These safety related changes did contribute to the rising capital costs of nuclear power. To at least as great an extent, however, cost increases were imposed by the industry's own misjudgments.
In particular, the economies of scale and learning curve effects expected under the turnkey program never happened. Instead, through the 1970s, diseconomies of scale and insufficient learning continued to raise construction costs. In 1963, GE had claimed its turnkey program would teach it to build nuclear power plants for about $100 per KW. By the mid 1970s, nuclear power plants were costing more than $3000 per KW. Those rising costs helped reverse a seven decade long record of falling U.S. electricity prices. The costs, and liabilities of nuclear reactors drove some utilities to the edge of bankruptcy. It was more this unfavorable nuclear economics than it was nuclear's dangers that killed U.S. nuclear power. The 1979 accident at Three Mile Island only confirmed a moratorium on new orders that had already begun.
Nuclear electric power had by then been revealed as an unnecessary technology. Fossil fuel was abundant and offered cheaper electricity. Only in the late 1980s would a scientifically-based and evidence-supported reason emerge to go nuclear. That reason would be climate change. By then, nuclear had been, whether justly or unjustly, thoroughly discredited. In the early 21st century, solar and wind power would replace it as the currently preferred alternative to fossil fuel. (566)
Meanwhile in the 1970s, GE management was caught unawares by a more general energy related change. This was the deceleration of total U.S. energy use. From 1890 to 1970 total U.S. energy use at least doubled in every decade but the 1930s. By 1970, that era of decadal doubling was over. That energy deceleration was just part of a more general U.S. and world economic deceleration. U.S. economic growth, productivity growth, and increase in use of raw materials, as well as world population growth, all also decelerated. "The 1970s," wrote economic historian Adam Tooze in 2023, "is really the moment where much of our modern configuration comes clearly into existence." (567)
GE strategists at first misinterpreted this modern configuration. They viewed the energy deceleration as a temporary dip. In particular, they expected U.S. electricity use to return quickly to its long term decade-doubling trend. Even with the expectation of this return to decade-doubling, there were reasons for alarm. In May, 1972, GE strategic planner John McKittrick explained to the GE Corporate Executive staff that
Over the past 24 months we have become increasingly aware that our power generation businesses are facing an entirely new set of conditions which, in the worst set of conditions, has the potential to convert an area of potential company strength into a situation of serious weakness. (568)
This new set of conditions, McKittrick said, included the entry of oil companies into the coal, uranium and nuclear fuel businesses, the need to build progressively larger power generation systems while meeting more stringent demands of environmental and reliability issues, and the "deteriorating trade position of U.S. manufacturers" in the face of foreign competition that had already created a "horrendous amount of excess manufacturing capacity."
Another GE planner, a corporate gadfly named John Fisher would craft responses to these alarming trends. He had been trained as a metallurgist, but in his GE career he ventured into theories of everything from the mechanics of cancer to the physics of elementary particles. As a manager at GE's Research Lab he had mentored a Nobel Laureate. Now in the early 1970s he worked at GE's California think tank, TEMPO. There, in both an externally published book and in internal company correspondence, he would explain how the company has gotten both ends of the energy situation wrong. On the supply side, there was no general energy crisis. Energy sources were, he said in "abundant supply". (569)
On the demand side, he predicted in advance the coming deceleration in electricity use. Those who listened to him were glad they did. For example, GE Power Systems had initially relied on corporate strategic planning's estimare that electricity use would continue to double every decade. This had led to plans to make a $300 million expansion in its facilities for building generators. However, as Power Systems manager Thomas Lee recalls,
because of Fisher's analysis, GE did not proceed with the expansion. The postponements and cancellations in the second half of 1974 proved the wisdom of that decision. (570)
As Fisher warned, the next doubling of U.S. electricity use would take not 10 but 25 years. Combined with the growing global competition in electrical manufacturing, this flattening of demand left GE with a big share of that large manufacturing overcapacity about which McKittrick warned. Of all the external trends faced by GE in the 1970s, it was that deceleration of U.S. electricity use and resulting overcapacity that contributed most to the decline and fall of the Old GE. (571)
This misunderstanding of future trends did not arise from lack of studying. Jones had greatly increased GE's strategic planning effort. The businesses and the Corporate components got new homework assignments. Each had to annually fill several thick three-ring binders with the details of an annual strategic plan. These plans were subjected to multiple corporate reviews. The process would culminate at corporate headquarters with a presentation to Jones and his top executives to obtain approval for the component's next year's budget.
This climactic event was an hour long reading of a fully typed out script by the component manager. It was illustrated by hundreds of slides projected with machine gun staccato and precision from multiple Kodak Carousels, the mechanical predecessors of PowerPoint. Jones and his Advisory Committee would listen in silence, some occasionally dozing off. At the conclusion, discussion was perfunctory. Jones, no technologist, would ask a question, possibly presupplied, about some arcane technology detail. The presenter would appear suitably stumped by the CEO's demonstrated technical chops. Jones would then conclude with a noncommittal promise to give the budget request his serious consideration. (572)
This ritualized months-long planning process caused bureaucracy to balloon, both at the component and the Corporate level. The components created their own strategic planning staffs to prepare the lengthy paperwork, as well as hiring speechwriters and creating visual aids and photography departments to illustrate those elaborate budget reviews. All this had the unfortunate effect of reducing GE's internal communication to ghostwritten incoherence. This was illustrated in the early 1970s when GE created an internal engineering award named after Charles Proteus Steinmetz.
The company's Vice President of R&D was assigned to present the award. Rather than doing so spontaneously, he insisted on a ghost written speech, one that would begin with a Steinmetz anecdote. His speechwriter obligingly dug one up. The anecdote concerned a terrarium in Steinmetz's home laboratory. There he kept his pet iguana. When showing visitors around, Steinmetz would tell how the iguana controlled its body temperature by its running speed. It would run around its cage fast on cold days and slowly on hot days. "So," Steinmetz would say, "if I had a stopwatch and an iguana, I wouldn't need a thermometer." He'd then add "and if I had a thermometer and an iguana, I wouldn't need a stopwatch!" Most visitors responded with appreciative chuckles. Not so a visiting student. She turned to him and said: "Yes Dr. Steinmetz, and if you had a stopwatch and a thermometer, you wouldn't need that damn iguana!"
That story has been told in full to show its many appearances of that word "iguana." The busy Vice President had not had time to rehearse. In his first reading, at the actual event, he soon came upon a word with which he was unfamiliar. He gave it his best effort: "Steinmetz had an "eye-goona". " The audience only chuckled. With each repeat of that challenging word, however his attempts at pronunciation strayed further from correctness. This was accompanied by growing audience laughter. He finally finished, red faced and fuming. His mood was not improved when the next speaker turned to him and said "don't worry — we hired you to run a research laboratory, not a zoo!" (573)
In a similar manner GE's Annual top management meeting, intended for airing important company issues, became instead a mind-numbing parade of clumsily read ghostwritten scripts. This did, however, have the positive effect of making the only two spontaneous presenters stand out. Gerhard Neumann's German accent, and Jack Welch's stutter, did not detract from, but rather humanized, their unscripted remarks. Welch's profanity, and Neumann's reference to big-busted secretaries, would not be accepted today. In the 1970s, however, these were seen as personal touches, helping GE's two most highly regarded managers spontaneously and convincingly convey important, if sometimes inconvenient, company truths. (574)
To house the corporate portion of that bureaucratic overload, Jones moved GE Headquarters from an older office building at 570 Lexington Avenue in Manhattan to full occupancy of two large multistory brand new buildings on a park-like 68 acre plot in Fairfield, CT. Nearby were golf courses suitable for Jack Welch's single-digit handicap. Filling the buildings, the Corporate staff increased from a few hundred to about 2000.
What did this amplified strategic planning effort and bigger bureaucracy bring forth? The only important strategic move Jones made as incumbent was to buy Utah International, a company that mined coal, uranium and iron ore. Its main business was selling coking coal to Japanese and European steel companies, helping them compete with their U.S. rivals. The owner of Utah International, Edmund Littlefield, was a GE Director and became the possessor of the largest individually-owned block of GE stock.
Utah International was initially profitable for GE. By the early 1980s, however, it had settled in as just another highly cyclical, slow growth, low profit, old economy dinosaur. In 1983, just two years after Jones left office, his successor sold it. Otherwise, Jones' 1970s planning effort, though divesting GE of a few minor businesses, mostly maintained the status quo. As a 1980 GE strategic planner put it, the process produced "the contradiction of a steady state GE and a changing world".
Fortunately for GE, the company's bottom-up entrepreneurship occasionally overcame its top-down strategic somnolence. It did so through GE's century old tactics. Get good ideas from outside and follow fast with diverse technology teams. These tactics had worked for steam turbines in the 1900s, refrigerators in the 1920s, and advanced materials in the 1950s. They would now, in the 1970s work again.
Crucial to this 1970s synergistic success was the GE Research Lab. This was a reawakening for a lab that had slumbered since the glory days of Whitney, Coolidge, and Langmuir. Since moving to a new building well out of sight of the Schenectady Works, it had assumed a pure research emphasis. Though producing good science, this proved of diminished relevance to the needs of most of GE's businesses. For example the lab's physicists achieved in the 1960s notable research results that earned four memberships in the National Academy of Sciences and a 1973 Nobel Prize. Perhaps the best testimony to the lab's quality was that the 1973 Nobel Laureate for Physics, Ivar Giaever, was regarded by his colleagues at the GE Research Lab as only their third best physicist.
That 1973 award contrasted sharply with GE's other Nobel. The 1932 Laureate, chemist Irving Langmuir, had done his prize winning work in the middle of GE's Schenectady Works. In that industrial setting he had drawn on his scientific insights to contribute mightily to GE businesses. One of his patents helped secure for decades GE's virtual monopoly of light bulbs. One of his papers propelled GE into leadership in the first electronics revolution. His subsequent hundreds of papers and dozens of patents showed a similar mixture of scientific excellence and industrial value. Giaever, by contrast, achieved his major discovery in a suburban laboratory far from the bustle of the Works. Neither his prize winning discovery, superconductive tunneling, nor his subsequent work, were ever picked up by GE businesses.
His winning of the prize was a heartwarming story of a young outsider who made good. He had been educated as a mechanical engineer in his native Norway. After emigrating to Canada he joined GE. A training program brought him to Schenectady. There a temporary assignment uncovered his interest in and talent for physics. He was a new member of John Fisher's research group at GE's Research Lab, and still working on his Ph.D. at nearby RPI, when he made that prize-winning discovery of superconductive tunneling. When he won the Nobel, his colleagues uniformly (and sincerely) said "it couldn't have happened to a nicer guy." His subsequent career, however, can be summed up in the subtitle he gave to his autobiography: "a Nobel laureate's difficult journey." (575)
More generally, in the quarter century following World War II, the insights and inventions of GE Research's excellent team of physicists and electronics engineers never achieved their intended impact. Fortunately, a string of successes in another field from the 1930s through the 1960s saved the lab's bacon. GE Research's chemists and chemical engineers, though a minority of the lab's staff, collectively had Langmuir-like impact on GE's highly successful advanced materials businesses. Key Research Lab materials innovators and engineers were Eugene Rochow and Charlie Reed in silicones, Tracy Hall, Herb Strong, Francis Bundy and Bob Wentdorf, in man made diamond and its nearly-as-hard GE-developed cousin Borazon®, and Dan Fox, Al Hay, and Edith Boldebuck in plastics. Fox's Lexan® was GE's biggest materials success ever. Boldebuck's discovery that certain plastics could be alloyed like metals made it possible to turn the excellent but hard to process plastic that Hay discovered called PPO into a more more processable commercial success called Noryl®. Boldebuck went on to set the GE record for most U.S. patents by a woman.
Now, in the 1970s one more chemical engineer would have the chance to jump start a GE business. This time, however, the target would be outside that field of advanced materials. Instead, the opportunity would for once enable the Research Lab's physicists, electronics engineers and computer experts to outshine their chemical cousins. The story began in 1969 when Godfrey Hounsfield, an electrical engineer at the British Company EMI, invented CAT Scanning. EMI, whose acronym stood for Electrical Musical Instruments, was until then best known for producing the records of the Beatles. Overnight it became a leader in medical diagnostics. CAT scanning married X-rays and computer power. Swing an X-Ray tube in a circle around a patient's body, with the X Ray tube on one side and detectors on the other. Take lots of data during that circular swing. Then send that data to a computer. It could reconstruct from that data a detailed image of a cross sectional slice of the patient. The payoff was unprecedented high resolution of the patient's insides, enabling, for example, detection of previously undetectable tumors. Experts at GE X-Ray were impressed with the ingenuity, but initially did not see it as a business. It seemed a limited research tool, too expensive and specialized to be bought by a typical hospital. Then a flood of EMI orders, soon labeled "CAT fever", caused GE to take a second look. Taking that look in 1972 was GE X-Ray's recently appointed manager, Walt Robb. He was another of the company's Ph.D. Chemical Engineers. He had started his GE career at its nuclear power lab, KAPL, then moved to the GE Research Lab, then into management. He rose steadily, if quietly. His one splash of publicity was appearing in a photo in Life Magazine, beside an aquarium in which a hamster in an underwater cage survived by breathing oxygen separated from the water by a membrane Walt invented. (576)People meeting Walt might be misled by his simple, frank, jargon-free speaking style, political conservatism, and occasional malapropisms into underestimating him. Anyone who spent much time with him, however, soon realized that he was perhaps GE's most astute judge of technical and business promise.
Walt's promotion to manager of GE Medical In 1970 was no plum assignment. That business had decades ago parlayed William Coolidge's X-Ray tube into profitable success. There were, however, only a limited number of things you could do with conventional X-Ray apparatus. By 1970 GE had done most of them. The choice now before the business was going into CAT or going into hibernation. It was not really a choice at all. In 1972, Walt concluded that GE should follow EMI. It should, however, do it not by duplicating EMI's system, or purchasing one of the EMI imitators already in the field, but by developing its own version of CAT. (577)
He consulted physicists, physicians, electrical engineers, and computer hardware and software experts. From them, he learned that there was more than one way to scan a CAT. One such way especially caught the GE study team's attention. If you replaced the thin, cylindrical "pencil beam" of X-Rays in Hounsfield's scanner with a broader, diverging "fan beam", this theoretically enabled not only a better image but also a a faster scan — reducing that scan time from more than two minutes down to less than ten seconds. This allowed patients to hold their breath and avoid blurring the image by body motion due to breathing.
This fan beam idea was already known to others. Hounsfield had rejected it. Others were trying it. They had not yet succeeded. Here GE, as previously in turbines, refrigerators and aircraft engines, had advantages that rivals lacked. Specifically, GE had lots of money, and lots of people on hand with the needed specialized skills who could be thrown immediately into action. GE Research Labs experts in such fields as electronics hardware and computer software were looking for new projects after GE's recent retreats in their fields. Walt Robb proposed to use them in a crash program at the Research Lab to build a fan beam CAT scanner. In this he had two enthusiastic allies: Research Lab director Arthur Bueche, and Walt's own boss, the Vice-President of the GE Components and Materials Division, Jack Welch. The Research Lab immediately mobilized a crash program. The initially high tension was heightened by continual calls for more speed by Welch and Bueche.
Robb's choice for the CAT scanner team's immediate manager was Rowland "Red" Redington. Round and mustached, cheerful and apple checked, with a frequent barking laugh, Redington looked and sounded more like a small town grocer than the Ph.D. physicist he was. He was skeptical of the creed of professional management. His own management priority was protecting his own technical team from excessive pressure from above. (578)
One episode in the many sided effort stands out. Rey Whetten was a precise, soft spoken expert in the "old electronics" of vacuums, gases, and electronic tubes. He had earlier helped develop an improved TV tube that had lost out in competition with RCA. That was as close as he had previously come to business success. Now he was asked to pinch hit a home run. His somewhat obsolescing old electronics expertise was, just at that moment, just what GE needed.
The X-rays used in a CAT scanner lose intensity by being absorbed by body features of varying density (flesh, blood, bones, etc). Measuring the remaining intensity provides the data that enables the computer to create an accurate image of a body slice. At this time, in 1976, the best way to measure ordinary light intensity had become the solid state detectors used in the new electronic cameras. An obvious choice for CAT was using similar solid state detectors for X-Rays. Twenty first century CAT scanners indeed use solid state detectors.
In 1973, however, solid state was not quite ready. The old electronics still worked better. Hence the need for Rey Whetten's excellent mastery of those old fashioned skills. He was given a make or break opportunity. "My manager came to me," he said later, "And told me he had put my continuity of service on the line." Rey kept his job. He developed a detector that enclosed the gas Xenon, under high pressure, in many thin chambers side by side. Each chamber acted as a separate detector. It turned the remaining energy of the X-rays into a more collectible and measurable stream of electrons. The outstanding sensitivity, speed and multiplicity of these Xenon detectors enabled faster production of higher resolution scans than achieved by competitors' CAT scanners. (579)
This episode only scratches the surface of an astonishingly complicated, pressure packed crash program. It took dozens of specialized, talented, and dedicated contributors, working long hours under frequent top management harassment, to squeak the project through to success. In 1978 Walt Robb introduced GE's own CAT scanner. It quickly rose to profitability and kept rising. GE not only passed EMI, it ended up buying EMI. By 1988, GE and Siemens shared world leadership in CAT scanner sales.
It has been said that nobody should be regarded as a great technology manager unless he or she creates two huge successes. That requirement eliminates almost all contenders. It does not eliminate Walt Robb and Red Redington. In the early 1980s, they would repeat their 1970s success. Again, it was an inventor elsewhere that got things started. Paul Lauterbur was a physics professor at SUNY Stony Brook when he conceived a remarkable idea. He showed how a quantum physics based chemical analysis technique called nuclear magnetic resonance could be used to image the human body. (To avoid confusion with bombs and reactors, the word nuclear was soon erased. The sanitized name became Magnetic Resonance Imaging (MRI).
Once again, GE was slow out of the gate. Once again, Walt Robb was at the helm of GE Medical. Once again he chose for GE to develop its own distinctive device. Once again Arthur Bueche and Jack Welch were enthusiastic allies. Once again Red Redington assembled the needed Research Lab team.
This time, however, the Research Lab did not have all the skills needed. No one at the GE lab had fully mastered MRI. By 1980, that technique had advanced from Lauterbur's conceptual breakthrough to lab prototypes at British universities. There actual, though crude and not medically useful, images were being made. The apparatus was developed with the inexpensive labor of recent physics doctoral recipients. Bueche saw a names of a couple of those postdocs on the author line of scientific papers about MRI. Soon two of them were GE Research Lab employees and on its MRI team. (580)
The two physicists quickly moved to the forefront and led the project to success. Bill Edelstein had grown up in the Schenectady area. A contentious polymath, he described himself as only a so-so Harvard Ph.D physicist. Offered postdocs in either MRI or gravity wave detection, he decided that MRI was more likely to succeed in his lifetime. As a postdoc, he obtained a patent that would prove crucial to practical MRI systems. At GE, he led the development of components such as coils that improved imaging capability. Sadly, in forecasting the progress of physics, he proved a prophet. After making those crucial contributions to GE's MRI development, and seeing MRI become a standard medical technique, he died just a few years before the announcement of the first detection of gravity waves.
Paul Bottomley, a soft spoken Australian, had worked a Britain's University of Nottingham on MRI as a graduate student, with a future Nobel Prize winning physicist. When the GE team planned its MRI approach, a key decision was how strong a magnet to use. The conventional wisdom was to use only a moderately strong magnet, .8 Tesla in magnetic field strength. Anything much stronger would cost more, yet would not improve, or even might degrade, the image. In one of his pre-GE papers, Bottomley had challenged that conclusion. A stronger magnet, he argued, could improve images. GE went with his view. It doubled the magnet strength. Its 1.5 Tesla magnet improved images enough to become the industry standard. Due to the efforts of a multidisciplinary R&D team at Schenectady of which Edelstein and Bottomley were the leaders, and an equally effective team in Wisconsin turning the research prototype into a product, GE jumped into the MRI lead. GE Medical Systems became by the late 1980s another GE multi billion dollar high tech growth success story.
Walt Robb, would later complain that his achievement was not honored on a par with Silicon Valley's entrepreneurial superstars. After all, he had built not one but two multibillion dollar high-tech businesses. His achievements were indeed remarkable. His request for that added recognition was, however, a bit excessive. Those Silicon Valley entrepreneurial superstars had hit their home runs from the batter's box. Walt's command of GE's money and its Research Lab talent had enabled him to start, if not on third base, at least on second.
More generally, in medical diagnostics GE was once again just one supporting actor in a improvisational repertory theatre like innovation. GE did not invent either CAT scanning or MRI. Instead it applied "yes-and" ideas. Yes, Hounsfield's invention is genius, and do it with a fan beam. Yes, Lauterbur's invention is genius, and do it with a 1.5 Tesla magnet. GE's medical diagnostics success was a triumph of synergy over strategy. It joined such previous synergistic unstrategized successes as aircraft engines, plastics, and diesel locomotives.
Even more significant was the continuing rise of GE Credit. From 1976 to 1981 its net earnings rose 18% a year, passing the $100 million mark and contributing 7% of the company's total earnings. By 1981 it owned and leased more than 90 jet airliners, 43,000 railroad locomotives and cars, and the largest U.S. fleet of merchant vessels. It was moving beyond industrial financing into consumer and real estate finance and insurance. (581)
Leading this expansion was department manager John Stanger. Far from strategizing this expansion, or even supporting it, Jones had tried to shut it down. "The business worried him. He thought we were beginning to take too many risks," wrote David Dance, the group executive to whom Stanger reported. Dance says Jones told him "to replace Stanger with a more conservative man." Dance replied that if that was done, Jones would also have to replace him. Jones backed down. Added Dance, "he never interfered with me again regarding GE Credit Corporation." (582)
Those GE Credit earnings were only the smaller part of its contribution to GE. The 1981 tax bill passed early in the first presidential administration of Ronald Reagan allowed corporations to claim increased tax credits for depreciation and other investment-boosting efforts. Such tax benefits claimed by GE Credit reduced GE's corporate tax bill from just over a billion dollars down to $145 million. Forbes magazine subsequently reported that GE not only "paid not a dime in federal income tax" on 1981-1983 pretax earnings, but even claimed tax refunds of totalling $315 million. A study by investigative reporter Philip M. Stern estimates the total "tax savings" racked up by GE in 1979-1986 at $4.7 billion. (583)
Skeptics might label tax breaks favorable to GE to be no coincidence. After all, they were engineered by GE's most famous alumnus. There is, however, little if any evidence, that Reagan was GE's stealth presidential candidate. Such evidence as exists points in the opposite direction. Reg Jones had been a key adviser to President Jimmy Carter. At a 1980 GE Management Meeting he confidently predicted Carter's re-election. (584)
As for that tax bill, business journalists reported that the benefits to GE from the 1981 tax bill were so outrageous that the tax bill passed in 1986 to plug some loopholes was known on Capitol Hill as the bill to "get GE". According to President's Reagan's chief of staff, it was Reagan's anger at his former employer's total escape from taxes that convinced the President to back that 1986 tax reform. (585)
Those GE Capital contributions, however obtained, helped Reginald Jones in 1981 to pass GE on in good economic health to his successor. In his nine years at the helm the company's sales had once again doubled, reaching $27.4 billion. Earnings also had more than doubled, to $1.65 billion. These were, however, inflation boosted numbers. In real terms, GE, which in its earlier days had grown twice as fast as the U.S. GDP, was now growing at only the same rate as that GDP. It was still a mere GDP company. Its prosperity, no longer profitless, was still judged by Wall Street as insufficiently profitable. That $1.65 billion earnings represented an adequate but unspectacular earnings-to-sales ratio of 6%.
Those figures might, however, be interpreted not as failure, but as maturity. GE had, for 90 years, ridden the electrical wave to achieve greater-than-GDP growth. Now the electrical wave had begun leveling off. So it was reasonable to expect GE also to level off. It could settle into a useful role making those earlier innovations still more efficient, more affordable, and environmentally cleaner. Such a modest, useful role was, however, anathema to both GE management and investors. Wall Street was embracing a view, most prominently expressed by economist Milton Friedman, that a corporation's only social responsibility was to maximize financial return to its shareholders. The old Swope-Young idea of serving the balanced best interests of workers, communities, country, industry, and shareholders had long since been discarded. Responding to this tenor of the times in 1981, Reginald Jones chose as his successor a man who would become fully committed to that stockholder-serving single-responsibility gospel.
Jack Welch was the son of a conductor on the Boston and Maine Railroad and a schoolteacher. It was his mother Grace who most influenced and encouraged him. As he battled a stutter, she assured him that it was only his mind working faster than his mouth. Indeed, that stutter, greatly reduced, would serve as a sort of special effect for his powerful, straight talking, speaking style. Similarly he parlayed modest physical assets into a place of his high school hockey team and excellence as a golfer.
He earned his undergraduate degree at the University of Massachusetts, following up rapidly with a Ph.D. in Chemical Engineering from the University of Illinois and a first job at GE. There he avoided company stereotypes. His rise took place at a relatively obscure GE location, Pittsfield, MA, in an unconventional GE business, plastics. There he became GE's most successful young manager by becoming its least sentimental, least conventional, and most brutal opportunist. When his appointment as CEO was announced in 1981, nearly everybody in GE said that he was the best person for that job. Nobody said "it couldn't have happened to a nicer guy."
That Jack Welch was a flawed human being was agreed to not only by his detractors but also by his admirers. One of those admirers referred to Welch's "volcanic nature", depicted him as uttering "a string of obscenities so awful I wouldn't want my mother to read them," and noted how, in Welch's GE, "civility was no longer a virtue, and splatters of career blood began to fleck conference room walls." Those less favorably disposed might put all this less diplomatically. Jack Welch was a foul-mouthed bully. (586)
The admirers might respond that those qualities, however regrettable, were needed to wake the stodgy, plodding mediocrity that was the Old GE. Not even those admirers, however, expected in 1981 that Jack Welch would euthanize that Old GE. The financial press did not know what to expect. Business Week noted Welch's Ph.D. in chemical engineering, his key role in building the plastics business, and his success in overseeing GE's CAT scanning success. Its 1981 story of his accession was headlined "The financial wizards turn back to technology." (587)
Welch indeed, in his first months as CEO, beefed up company high-tech efforts. His predecessor had already taken such steps. In the waning days of his tenure, in 1981, Jones announced somewhat prematurely, a GE "technological renaissance" In 1981, the year Welch took over, GE, seeking to strengthen inadequate microelectronics programs bought an integrated circuits company, Intersil for $180 million. To revive an aging effort in industrial equipment GE bought a computer aided design company, Calma for $350 million. With robotics seeming to emerge as the next big thing in manufacturing GE invested $500 million in a "Factory of the Future" program.
In December, 1981, Welch made his Wall Street debut in a talk to stock analysts at New York City's Hotel Pierre. A legend grew up later that this was the occasion when he announced the abandonment of the electric past in favor of the financial future. Actually, the talk contained only one strategic imperative. GE's businesses must quickly reach #1 or #2 in their markets or face divestiture. Otherwise, the talk was an energetic blast of vague platitudes.
Within GE, Welch acted more decisively. He decimated the strategic planning overload and cut the planning bureaucracy. Component managers arriving at company headquarters with the usual elaborate presentations found themselves instead subjected to intensive impromptu and often brutal grilling. Their scripts rested unread, their carousels of slides unprojected. (588)
Welch also sharply cut the corporate staff. At Fairfield headquarters it was reduced from over 2000 to less than 500. It soon became apparent that only one of those two new buildings was actually needed. Brutal cuts across the company soon followed. In his first three years, Welch cut 100,000 jobs, about one in every three of GE's U.S. jobs, earning himself that Neutron Jack nickname.
Slimming down the company's bloated middle management and planning bureaucracy was an immediate Welch priority. To at least some department or plant managers, it was a much needed step. For example, John Flock, a chemical engineer, was during the Welch era the manager of GE's plastics plant in Mt. Vernon, IN. When he took the job, he had 27 managers reporting to him. Welch reduced that number to four, one for each of the plant's product lines. The demoted managers were not fired, however. They were put to work in production. With that change the plant became both more productive and more profitable. (589)
Welch's staff reductions also reflected GE's subsequent transition from a manufacturing to a financial giant. That transition, however, was not a pre-planned strategy. It was an adaptation to reality. That reality had begun with a realization that GE's productivity was simply not world class. At a 1979 management meeting, a Vice President who had been appointed GE's "Productivity Czar" pointed out that GE had, with difficulty, increased its annual productivity growth from 1.6% to 4%, The corresponding number for rival Toshiba was, however, 8%.
In 1981 GE proclaimed its intention to be a full service supplier of automation equipment, including robots. The leader of the effort predicted sales reaching $100 million by 1986 and $600 million by 1990. He presented potential U.S. customers with three choices: automate, emigrate, or evaporate.
Reality, however quickly punctured those claims. GE never became a major player in the ongoing robotic revolution. Instead, the GE effort would itself take only a few years to both emigrate and evaporate. The emigration part became by 1985 a 50-50 merger with the Japanese automation company Fanuc. Those in the know recognized this as not an alliance but a surrender. After 1986, Fanuc would continue its rise to world leadership in robotics and automation. GE' share of the joint venture would evaporate. (590)
These initial setbacks would later in the 1980s be followed by other technology initiatives with similar fates. Two involved two of GE's signature successes of the past. In light bulbs, the 1980s were finally the time to replace the Wizard's now unacceptably inefficient incandescent lamp. Two options had emerged. One, called the Compact Fluorescent Lamp (CFL), basically shrunk and twisted the fluorescent lamp to light bulb size. The other was a solid state device called a light emitting diode (LED). A physicist at GE's Advanced Semiconductor Laboratory at Electronics Park, Syracuse, NY, Nick Holonyak, had, back in 1962, been one of the original inventors of the LED. GE had not, however, kept up its leadership as LEDs made their painfully slow way from invention to innovation. (591)
By the 1980s, the LED innovation effort still required at least a decade of R&D and patience. The CFL was potentially less efficient and shorter lived, but would be ready quicker. GE chose that quicker path. It indeed got on the market quick, in the 1980s. But the lamp had problems in color, cost, and reliability. The product soon sputtered out. Meanwhile, more patient Asian competitors achieved steady improvements in such LED characteristics as color, efficiency, long life and lower cost. It would be that improved LED, absent GE participation, that would light the 21st century. (In the 2020s, many LEDs did bear the GE monogram. They were, however, the made-in-China products of the 2020 purchaser of GE Lighting, an independent company named Savant). (592)
In refrigerators, GE also saw a 1980s need for innovation. A key GE refrigerator component, the compressor, still operated by inefficient reciprocating (back-and-forth) motion. Efficient compressors on everything from aircraft engines to air conditioners were rotary. Rather than buy a rotary compressor, GE decided to make its own. Here both management pressure from above, and too aggressive cost cutting from below, intervened. While adapting a rotary air conditioning compressor to refrigerator use, a designer found a way to make a key part from a cheaper metal. Meanwhile, under pressure from above, reliability testing was rushed and product introduction speeded up. As a result, a million of the new refrigerators were in customers' homes in 1989 when the cheap part started failing. The fiasco would require replacing those million refrigerators at a cost to GE of hundreds of millions of dollars. (593)
Other GE technology efforts of the 1980s did achieve technical success. The most promising one, however, suffered from bad timing. This was extending the gas turbine success of the 1960s into the old idea of combined cycle power generation. The possibilities here were staggering. Burning fuel in a gas turbine at a high enough temperature could, in theory, double the efficiency of power generation, from the 35% of the best steam turbines to as much as 70%. Unfortunately, the technical challenges were as daunting as the goal was attractive. The high temperature needed, 2500° F. or more, would melt the best conventional turbine buckets. Those high temperatures would also produce unacceptable amounts of nitrogen oxides pollutants. The ideal fuel for the system, natural gas, was regarded as too scarce. During the 1970s energy crisis, the U.S. Congress passed a Fuel Use Act that sharply restricted the use of natural gas in electric power generation. (594)
GE did try out the combined cycle idea in the 1960s under the name STAG (Steam Turbine and Gas). The efficiency, however remained below that of steam turbines. The complexity and inability to run on coal fuel were added disadvantages. In 1972, a study by GE's strategic planners of future power generation prospects concluded that
any serious challenge to steam turbines by gas turbines would cost entirely too much — development funds that might better be directed, for example, to a catch up program on our nuclear reactors. (595)
GE took that advice. Looking back on this decision later, a leading GE power systems expert, Thomas Lee, viewed that decision as a mistake. Said Lee in 1990
If sufficient effort had been applied to improve the reliability of combined cycle systems, the probability of success would have been very high. But it was not done, and the acceptance of this important technology was therefore delayed. (596)
In 1987, the U.S. Fuel Use Act was repealed. With natural gas subsequently made plentiful by fracking, the efforts of GE and competitors in combined cycles was sharply ramped up. In the 21st century, combined cycle efficiencies of 50% were achieved in commercial natural gas fired combined cycle power plants. With a further R&D program funded by the federal government, that 70% efficiency goal came in sight. Unfortunately, the post 1987 rise of the natural gas fired combined cycle coincided with rising acceptance of the connection between fossil fuel combustion and climate change. By the 2020s, the energy priority had changed from increasing the efficiency of fossil fuel use to phasing out fossil fuel altogether. The combined cycle, despite its technological success, seemed by the 2020s to be transitioning instantly from an idea whose time has come to an idea whose time had passed. (One should add, however, that the ability of the gas turbine to run on pure hydrogen offers a ray of future hope, should sufficient supplies of that gas be discovered or economically produced.)
That rise in the understanding of climate change in the 21st century led historians to ask a related question. What did the energy companies know about climate change, and when did they know it? A team of historians led by Natalie Oreskes asked this question about Exxon. They concluded that it "had known since the late 1970s that its fossil fuel products could lead to global warming". (597)
Much depends on the 1970s meaning given to that word "could." Did it mean the energy companies saw climate change as likely, uncertain, possible, or merely speculative? For GE, the answer seems to be somewhere between uncertain and possible. "People knew by the 1970s that CO2 was increasing," recalled Richard Alben, a physicist then working on energy technology evaluation at GE's Research Lab. "What was not known was the climate effect. In 1980 there was no conclusive evidence of a temperature increase." GE Power Systems offered in 1972 an even more vague projection.
The long term development and future price of coal is dependent on many ecological and technological developments that are as yet unclear. (598)
In 1986, the possibilites of climate change got sufficient attention from GE Nuclear for one of its managers to write
Nuclear power has reduced the discharge of CO2 into the atmosphere by over a billion tons. This may be of vital importance if concerns over the Greenhouse Effect are borne out. (599)
On that subject of climate change, uncertainty continued to prevail at the corporate level throughout the last decade of the old GE. Any idea that GE secretly knew before 1986 that climate change was coming, but suppressed the knowledge to sustain its fossil fuel based profits, gets no support from surviving evidence.
More generally, it was only toward the end of the Old GE that environmental issues got major company attention. The issues had, of course, been there all along. The ultimately most publicized environmental issue did not emerge at a high-tech site. Instead, that issue emerged at a couple of small obscure and minor plants engaged in an old electricity related business.
It all began in the 1930s with an attempt to make electricity distribution safer. In the Universal System, such electrical devices as transformers and capacitors got hot. They were originally cooled with oil. Sometimes the oil caught on fire. So it was considered a laudable step when, starting in the 1930s, efforts began to replace that flammable oil with a non-flammable cooling fluids called polychlorinated biphenyls, or PCBs. (600)
To put those PCBs, purchased from Monsanto, into electric power systems devices called capacitors, GE opened plants in 1947 in the towns of Hudson Falls and Fort Edward, NY, on the upper Hudson River not far north of Albany. Scientific research published as early as 1937 had indicated harmful human effects, such as acne, from exposure to PCB's. This was countered in those plants by procedures to keep workers safe. Later company funded studies showed no increase in cancer among those PCB exposed workers.
GE's PCB residues were disposed of by dumping them into the Hudson. There, presumably, they would diffuse, decompose, or disappear into the river bottom.More than a million pounds of PCB's had been so disposed of by the 1960s when long simmering concerns burst into prominence.From Sweden, came evidence that PCB's could accumulate in fish. Then U.S. studies asserted PCBs to be a possible cause of cancer On the Hudson, a citizens' movement led by folk singer Pete Seeger set out to reclaim that scenic river from PCBs and other pollutants. In 1976 the state of New York banned fishing on the upper Hudson. It reached a settlement on PCB's that year with GE and its chief negotiator Jack Welch. Under the resulting consent decree GE, admitting no wrongdoing, would cease dumping PCBs, take further remediation steps, and pay $3 million.
Any hopes that GE had ended the PCB issue by this agreement, or by the closing of the Hudson Falls and Fort Edward plants, proved premature. In 1984 the Federal government declared a 200-mile stretch of the Hudson River a Superfund site, for which GE was to blame. GE responded wIth intense lobbying, stonewalling, and denials of PCB harm. This extended the issue into the New GE era. Rhetorical PCB fireworks in that era included an angry exchange at the 1998 GE Stockholders' meeting between Neutron Jack and Sister Patricia Daly of the Dominican Order, an activist nicknamed the Stinging Nun. (601)
Welch had retired by 2004 when the issue finally reached a resolution. GE would have to pay for the dredging up of millions of cubic yards of river bottom, to remove over 100,000 pounds of PCBs from a 40 mile stretch of the Hudson. It took six years, at a cost to GE of more than a billion dollars. Decades later, controversy still swirls. How much good (or perhaps even harm) did the dredging do? How clean is the Hudson? What are the long range health effects of PCBs? What did GE know about those effects, and when did it know it? Meanwhile, on the Hudson, and at other PCB impacted locations such as the Housatonic River that flows past GE's Pittsfield, MA works, protest and litigation continue.
Back in the 1980s, PCBs may have been GE's most serious electrical manufacturing related environmental and public relations problem. They were not, however, its most serious economic threat. In 1982 Herman Hill, Vice President of GE Power Systems looked back on the 1970s and proclaimed them his business's "worst decade ever." He added that
Ten years ago Schenectady shipped 19,000 megawatts of steam generation capacity. Today the available world market calls for only 10,000 megawatts. (602)
As these realities had emerged in the 1970s, Reg Jones and his team largely ignored them. As late as 1979, the VP overseeing the nuclear business was still predicting that by the year 2000 the U.S. would have more than 200 nuclear reactors, about half made by GE. In reality, the total number of U.S. nuclear reactors would peak at 108 in 1990. By then almost all of the 46 reactors on GE's books had been cancelled, and GE had stopped taking orders for new ones. (603)
Jack Welch's strength was recognizing these realities. He did not strategize. He adapted. In adapting to the U.S. economy of the 1980s, the wizard that Jack Welch would channel would not be his distant ancestor, technology wizard Thomas Edison. It would be his contemporary, financial wizard Warren Buffett. He was demonstrating a new form of conglomerate. It did not grow from a technological seed, or from a use of acquisition to imitate natural diversification. Instead, Buffet's Berkshire Hathaway grew by shrewd analysis of the long term prospects of possible acquisition targets. This revealed that, counter to the then reigning economic theory called efficient markets, the stock market sometimes significantly undervalued established companies. The job of the new type of CEO was not to strategize. It was to identify and scoop up those undervalued companies before someone else did.
By 1986, Welch had taken up this kind of dealmaking. He would turn GE's more successful manufacturing businesses into collateral and cash sources for this financial wizardry. The less successful businesses he would sell. It was the 1984 sale of GE's housewares business to Black and Decker that announced to the world that the Old GE was on the auction block. As Welch accumulated cash, he promised not to let it burn a hole in his pocket. In 1986 he fulfilled that promise with the purchase of RCA. That old radio and TV giant, originally a GE spinoff, had in the 1970s become a very troubled company. It had diversified too widely and unwisely. Reacting to those troubles, Wall Street had, however, gone too far in driving down its stock price. Welch spotted that undervalued target. In doing so, he had been guided by Wall Street titan Felix Rohatyn. In addition, the recently installed CEO of RCA, Thornton Bradshaw, appears to have preferred a friendly GE buyout to a less friendly takeover engineered on Wall Street. With that support, Welch pounced. The stock market price of RCA in its last days in 1986 was about $50 a share. GE paid $66.50 a share. RCA would turn out to be worth somewhere between $70-$90 per share. (604)
Welch reaped this profit by selling off RCA businesses except for its remaining jewel, NBC. Then, showing that his deal of a century was not a one off, he immediately followed up with the purchase of the long established and well known investment bank, Kidder Peabody. Over the rest of his incumbency, the number of GE acquisitions and divestitures swelled into the hundreds.
RCA turned out to be a bargain. NBC, before the GE purchase, had put to work two programming geniuses, Grant Tinker and Brendan Tartikoff. They delivered a string of sensational hits, including The Cosby Show, Frasier, Friends, The Golden Girls, and Seinfeld. NBC suddenly in the late 1980s soared from last to first place in the networks ratings race, and stayed there until the year 2000. It provided GE with a moneymaker, though only a temporary one. New GE-produced shows lacked the magic. In the new century NBC soon joined in the general decline of network TV. As it did, a character who was a thinly disguised version of Jack Welch became the butt of jokes on the NBC sitcom 30 Rock.
The other major acquisition of 1986 was a spectacular failure. Kidder Peabody tanked immediately. Its decline was accelerated by a brash embezzlement by one of its stock-trading superstars. All that, however, was in the future when, in 1986, GE's Annual Report rang out the Old GE and welcomed in the New. In its last year, 1986, the Old GE had sales of $37 billion, and earnings of $4.3 billion. Reading the details of that 1986 Annual Report showed that New GE to be still a work in progress. A listing of the approximate fractional sources of GE earnings indeed showed Financial Services to be spectacularly on the rise, but as yet only achieving a tie for second place. The list read: Appliances 23%; Aircraft Engines 18%; Financial Services 18%; Aerospace 12%; Power Systems 9%; Materials 8%; Industrial 4%; Medical 4%; NBC 4%.
To put some color into those 1986 numbers, take a quick and selective tour around that 1986 last-of-the Old GE. It was a mixture of new financial empire, old industrial works and new information businesses. In some cases, it was two of those at once. In Erie, PA, for example, a 1900 era brick factory buildings held the increasingly computer controlled processes for making diesel electric locomotives. Down at Daytona Beach, Florida, behind tall palms, the production machines were computers, and the products were pictures of cloud, sky and earth so realistic that a person sitting in one of the flight simulators produced by GE for the Air Force couldn't be quite sure that he was not looking at the real thing. It was, by 1986 standards, the ultimate video game. A lucky visitor might be permitted to play.
Business was brisk also across Florida at St. Petersburg, where GE made the triggers for hydrogen bombs. But it was not so good inland at Orlando. There, past a burnt out orange grove and an abandoned Minute Maid plant, a factory that used to make Christmas tree lights had been remodeled and expanded into a factory of GE's Robotics and Vision Systems business. Its mission was to make robots for those GE-built "factories of the future" that were going to reindustrialize America and fight off the Japanese. But right now that plant was not making any robots. It was uncrating robots made in Japan, paintinq on an orange stripe and slapping on a GE monogram, and shipping them out again. Up north, at Charlottesville, Virginia, at GE's recently created automation laboratory, things were also not going well for the factory of the future. There, two advanced automation projects had also been designed to beat back the Japanese. Now, in 1986, one looked like an overpriced failure, while the other was way over budget and far behind schedule. Rumors were already flying about that coming deal with Fanuc.
From the factory of the future, journey to the the factory of the past. Fort Wayne, IN's GE Works was still surrounded by 19th century buildings, some recycled for 20th century purposes. At the last turn before the plant, a carved stone facade still proclaimed Broadway State Bank. The wooden sign beneath however, announced "The Scorpion Lounge — Exotic Dancers — No Cover." The plant itself continued the juxtaposition of past and present. On a red brick wall you could still read, in faded letters, the words "Wood Systems". James J. Wood had brought the manufacture of electric power systems to Fort Wayne back in the 1880s, about when he put the first electric lights on the Statue of Liberty. Not long afterwards, by bringing Marcel Audiffren's invention back from France, he would start the chain of events that would put GE into the refrigerator business.
Things were not going so well on the day of that 1986 visit to Fort Wayne. A major customer had announced that it would buy its electric motors not from its long time supplier GE, but from rival Emerson Electric. Emerson lacked GE's technological strength and proud tradition, but it could produce serviceable motors at a cost too low for GE to match. A year later, Fort Wayne's electrical workers' union would sign an unprecedented wage giveback aimed at making GE more competitive.
Down at Cincinnati, Ohio, by contrast, things were going very well indeed. GE had just been selected over rival Pratt and Whitney as the winner of the "great engine war", the choice of the main engine builder for the Air Force's main fighter plane. In the spotlessly clean buildings of the GE aircraft engine plant. where the factory floors were so huge you travelled around them in electric golf carts, the mood was buoyant. After four decades of staring up the tail of Pratt and Whitney, GE zooming past into the lead.
Down the Ohio River, in Louisville, Kentucky, things were also going well. A new dishwasher design and its automated assembly line had vaulted GE into the lead of yet another market. Good, too, up in Waukesha, Wisconsin, where GE manufactured its very successful line of CAT scanners. Not so good, however, in Sunnyvale, California, where GE's computer aided design venture, Calma, was drowning in red ink. Not so good either in Raleigh, North Carolina, where the staff of GE's Microelectrics Center was finding it unexpectedly difficult to compete in the new microelectrics era.
Very good, however, in Lynn MA where the one time Thomson-Houston Works had become the eastern branch of the aircraft engine empire. Across Massachusetts, at Pittsfield, the best of times and the worst of times stood side by side. The buildings where GE transformers were once made, one of them still bearing the name of 19th century transformer pioneer William Stanley, now stood empty. The people who used to work there, who once occasionally stepped in or rinsed their hands in, a dielectric fluid called PCB, were now wondering what it might have done to their health. (605)
At the same Pittsfield Works, however, the GE Ordnance Systems Department was busy making drive systems for fighting vehicles, and missile launching systems for submarines. Down in the basement, an engineer proudly pointed out a GE-built complex of controls and computers for launching a Polaris missile. Another ultimate video game, but this time visitors were not invited to play.
Further down the Pittsfield Works, at One Plastics Avenue, the prosperous GE Plastics business was adding a brand new showplace, a Plastics Technology Center, built as much as possible out of GE's highly successful engineering plastics, such as transparent, impact resistant Lexan® resin. People in Lexan® houses, a host told visitors, don't have to worry about throwing stones.
The tour could cross oceans, for example to another plastic plant in Bergen op Zoom, Holland, or to a circuit breaker plant in San Juan, Puerto Rico. GE, however, had in 1986 some 300 locations around the world, and this tour is already growing tiresome. So instead, head West over the Berkshires and back to this book's central location, Schenectady. (606)
Walk around town and you could not help hearing, or overhearing, constant talk about 1986's chief topic. Usually the tone was bitter, like that of the woman behind you in line at the Price Chopper supermarket, loudly lamenting her brother's layoff. Sometimes it was matter of fact, like the tone of a grade school student: "my dad used to be a welder for GE. Now he cleans bathrooms." Sometimes it was a little bewildered, like the tone of the middle aged man in the booth behind you in the Flavorland Restaurant, discussing his GE silver bullet: "I've never been unemployed before."
Walk through a sadly declined downtown, its recently flourishing department stores and movie theatres now closed up. Turn onto Erie Boulevard, the filled-in old Erie Canal, where the most prosperous looking building sold pornography. Continue on towards a 168 foot long sign with its 35 feet in diameter GE monogram made out of 1399 25 watt GE light bulbs that marked the entrance to the Works.
The immediate entrance looked like it had for over half a century, with Building 2, the main office building on the left, and on the right, Buildings 5 and 37 (the one with the big sign on top), the buildings that housed the two laboratories founded by Charles Proteus Steinmetz, General Engineering and Research.
You did not have to get much farther down Works Avenue, however, to see signs of Neutron Jack at work. In the building that had held the old Apprentice Training Program, the lathes were silent and the lights were out. After three generations, GE was no longer training any more craftsmen at Schenectady. A little further down, the engineering headquarters of the Large Motor and Generator stood more recently abandoned. In the lobby, a black cloth board held white plastic letters that still spelled out the directory of its late occupants, though all in small letters- perhaps a cost reduction. The visitor resisted with difficulty the temptation to place before the name of a manager named cummings the initials "e.e."
Across the Avenue stood a barren lot littered with rubble and swept by the wind. Had you visited not many months earlier, you would have seen there a classic, now empty, "cathedral shop", as they called those raised-roof natural-light illuminated factory buildings a century ago. Inside it, two rows of great square wooden columns stretched away into the darkness. Between the wooden blocks that made up the floor cracks held the oil, grease, and dirt of a century of making nearly everything from turbines to railway motors to refrigerator parts. A bleak grey light filtered through the rows of dirty windows. Far above, on steel rails, still sat a 10-ton crane. One imagined leaping into the cab, grasping the controls, and swooping the length of the building like a great bat.
That had been Building 10, just before its 1986 demolition. For an earlier visitor, in the spring of 1886, the building had also been empty and abandoned. Then, however, it was also brand new and never yet used. It was a perfect find for the man the visitor was representing, a New York City inventor-industrialist known as the Wizard.
Continue on down Works Avenue and you get to Building 273,the last "big shop". It still looks as good in 1986 as it did when it was built in 1947 (and will still look good in 2024). Not that it was impressive from the outside. It was squat, boxy, and gray. Go in, go up the elevator, and you might think you were in a very ordinary office building. Walk through a door, and suddenly you are standing on a balcony, overlooking a vast roofed canyon, filled with castings, forgings, machines, and here and there, people. From overhead, high pressure sodium lamps bathe everything in illumination just the orange side of sunlight. It was not as noisy here, as it had been been back in the 1960s when 25 or 30 turbine-generators were under construction at once. A guide hosting visiting customers reels off some big numbers: a quarter of a mile wide and a fifth of a mile deep… you could put 16 football fields down there, or if you preferred, Yankee Stadium.
The proposal for this last of the Big Shops had arisen after World War II when GE was flush with postwar optimism. As GE Power Systems lore portrays it, no detailed studies, no market forecasts, no appropriation requests were needed to build this building. In 1948, the vice president of GE Power Systems drove down to GE's New York City headquarters, rode the elevator up to Charlie Wilson's office, went in and told the president "look, if you're going to stay in this business, we need this building." And Charlie answered, "you've got it." (607)
When that Building opened in 1950 it enclosed perhaps the the world's largest manufacturing space under one roof. It enabled GE to quadruple its output of steam turbine generators at Schenectady from 3000 MW/yr in 1946 to 12,500 MW/yr in 1963. Turbine generators made in this building in 1986 were essentially the same as the machines that were made there in that opening year of 1950. The steam turbine generator that had evolved at Schenectady in the first half of the 20th century, under the leadership of William Le Roy Emmet, Billy Madigan, Oscar Junggren, A. R. Smith and Glen Warren, and with the work of hundreds of other engineers and foremen, and thousands of skilled shop workers, proved awfully hard to improve on.
Entering that Building 273 in the year 1986, a visitor first encountered, on nearby balconies, engineers working at computer terminals. On the floor below, the pace was glacial. Many machinists were now mainly observers, watching as numerically controlled machine tools cut grooves into cylindrical 200 ton turbine rotors. A foreman sitting at a U-shaped Formica table would occasionally get up, wander over, and take a look. A quality control man might walk by, recording his measurements. If, however, a visitor tried writing in his own notebook, he was told to stop. Neither management nor workers liked to see outsiders taking notes.
A visitor walking the length of a couple of those football fields could recognize individual parts: retaining rings the size of washing machines; a turbine rotor with buckets attached looking like two giant metal Christmas trees stuck tip to tip; a steel generator shell the size and shape of a mobile home. The big steel parts had been molded or forged elsewhere, at locations as far away as Krupp in Germany. The Schenectady Works foundry had been shut down for good back in the 1970s. The workers were mostly, but not all, white men, mainly middle aged or older. Many had put in a decade or more in other GE shops before being entrusted with this crucial task of turbine making. Some had graduated from that recently shut down GE Apprentice Course.
All tasks were not yet, however, automated. Building 273 veterans could be seen using their hands to clean something, adjust something, or bang something into place with what seemed a ubiquitous tool of turbine making, a rubber headed mallet. For example, at a steel table, a curly haired young man filed the edge of a turbine bucket, fitted it into a slot in a turbine wheel, then banged it into place with one of those mallets. The buckets, some as short as a finger, some as long as an arm, were as precisely and aerodynamically shaped as airplane wings. They had been machined the old fashioned way in a building next door. In 1986 no computer controlled machine tool had yet achieved the necessary precision.
In a similarly throwback manner, loops of flat, shiny copper conductors hung from overhead slings, as two grizzled, balding workmen levered those conductors into generator stator grooves with wooden sticks. Nearby, a stout Black man pulled his finger from a tube of white sealant, and carefully applied it to a joint where a cooling water hose would meet a conductor. These tasks were still beyond the capabilities of a 1986 robot. Turbine making had never been done on a Fordian assembly line. In 1986 it was only gradually and incompletely becoming computer controlled and robot assisted. More generally, in some places locally, slowly and incompletely, in others globally, rapidly and decisively, the Old GE was ending, giving way to the New. How did that change look to the world of 1986?
That reaction to the New GE and its leader was highly polarized. From the business press, the New GE got high praise for its skyrocketing market value. Jack Welch was being elevated into the new and highly select category of businessman-as-media-celebrity, alongside realty tycoon Donald Trump. From workers and citizens at deindustrializing GE locations across the nation came the different response of bitter denunciations of Generous Electric and Neutron Jack. Only a few people expressed a more detached skepticism about the unity and permanence of the New GE. One of them, former ITT chairman and conglomerate builder Harold Geneen put it this way in 1988: "I haven't studied it, but I would guess that the pieces of GE exceed its market value." (608)
It would take nearly 40 years for Geneen's offhand guess to become a validated prophecy. It took only 14 years, however, for the New GE to prove to be a bubble. The story of the rise and fall of the New GE story has been told in several recent books. In this story of the Old GE it will only be briefly summarized in the next, and concluding chapter.
This book's narrative portion ends where it began, with reflections on the 1986 deindustrialization of GE. It was three generations in the making. The full 1886-1986 trajectory of Schenectady GE employment gives some perspective. In Schenectady, industrialization and deindustrialization plotted a nearly symmetrical century long bell curve. It began at zero in 1886, peaked at 45,000 in 1945, and then declined in a roughly mirror image of its rise. Extrapolation of that bell curve in 1986 predicted a return to zero in 2005. That symmetrical picture suggests a long term symmetrical perspective on Schenectady deindustrialization. The Edison Machine Works had come to Schenectady in 1886 to escape crowding, politics, and unions. It began to leave Schenectady, starting in 1946, to escape crowding, politics, and unions. Bad as the year 1986 had been in Schenectady, deindustrialization was not devastation. The three neighboring New York cities of Schenectady, Albany and Troy, though still politically independent, had since 1950 blended into a Metropolitan Area called the Capital District. Over that 1950- 1986 time span 30,000 Capital District jobs were lost at GE. In the Capital District in that same time span 30,000 jobs were added by the New York State Government. (Exemplifying this transition was Leonard John, a grandson of Schenectady GE machinist, union leader, and 1911 Socialist Bill Turnbull. In 1950, Leonard was operating a tabulating machine for the New York State government). (609)
Similarly it is too narrow to view deindustrialization as simply an injustice to those illustrative GE families that had labored for three generations at the Schenectady Works. Those families had gotten three generations of upward social mobility. By 1986 some family members had attained non-GE local prominence. Most, however had long since moved on from Schenectady. The greatest employment injustice of deindustrialization was not to these early arrivals. It was to the later arrivals who never got the chance to industralize at all. In particular, deindustrialization was an injustice to the increasing number of Black families arriving in Schenectady during and after World War II. They were coming in one door as GE was going out the other.
In 1940 Schenectady had been less than 5% Black. By 2020 Schenectady was 20% Black. By then, however, GE was just another employer in the city of Schenectady. It was not mainly discrimination, but rather deindustrialization, that deprived Schenectady's Black population of the chance to emulate the social mobility boosting GE experience of Schenectady's earlier arriving ethnic groups.
Regarding equal opportunity in the Company as a whole, GE had a better record. It had issued a formal policy forbidding discrimination on the basis of race in 1935. As earlier noted, in 1947 GE CEO Charlie Wilson chaired Truman's civil rights commission, a progressive milestone in the road to equal opportunity. In 1948 GE became the first major company to make Howard University a regular stop on its annual engineering recruitment schedule.
Under decentralization in the early 1950s department managers of the new southern plants were allowed to set their own employment policies. Some followed local segregationist norms. Others, particularly in the upper South, sought from the first to integrate, even in the face of opposition. For example, at GE's Appliance Park in Louisville KY, White workers went on strike to protest working with Blacks. Management stuck with equal employment, disciplined, and in some cases fired, strikers, and continued its integration policy.
A new plant at Lynchburg, VA was the subject of a detailed study by academics Theodore Purcell and Gerald Cavanaugh. GE opened a factory there 1956. By 1960 it was the headquarters of GE's Communications Systems Division with an employment of 4000. Integration efforts had begun in the 1950s. GE's Black work force at Lynchburg reached 6% of the total work force in 1962 and 17% by 1968. That latter fraction was higher than the Black percentage of the local population.
At first GE insisted on very stringent qualifications for these black employees. For example, 78% of Black hires were high school graduates, versus only 40% of Whites. Expectations were set high. One new Black employee recalled being told "you are the Jackie Robinson of the Microwave Department." As both races settled into mutual acceptance, a stronger effort was made to widen the applicant pool. A joint industry government Community Action Program went into neighborhoods to seek out less obvious candidates.
Much of the success was due to the department manager. He was Lou Rader, encountered earlier as one of the successful and unconventional GE managers of the decentralization era. He not only accelerated equal opportunity hiring at the Lynchburg plant, but also spoke out strongly and publicly against Virginia's "massive resistance" defense of segregation. (610)
In 1986, minorities made up 11.4% of GE employees, 8.5% of professionals, and 5.6% of managers. In that year, women made up 27.6% of GE employees, 16.5% of professionals, and 8.5% of managers. (611)
The 1986 deindustrialization, with its varied effects on the 300 GE manufacturing locations around the world, had not come out of nowhere. It was implicit in the earlier industrialization of GE. The storms that hit GE ca. 1970 only helped complete the century long process. What were the buffeting external storms that, ca. 1970, hit the Old GE? The most important of those were those 1970 energy and economic decelerations. The particular deceleration that especially changed GE was the end of the decadal doubling of electricity use in the U.S. GE had ridden a rising wave of electrification since its founding. To double its sales in nearly every decade, all it had to do was to hold 25% of the electrical manufacturing market. The profits from the branching of the Edison Elm came as a bonus. By the 1980s, the electrification wave plateaued. As it did, foreign competitors and U.S. entrepreneurs were outcompeting GE. It would have to find another way to double. The way it found was finance. How did those external trends of the 1979s change GE?
That plateauing of electricity use completed the process of turning GE from a growth engine into a mere GDP company. Add in GE's failures in electronics, computers and nuclear power and you have by 1980 a company ripe for renewal. To achieve that renewal, Jack Welch did not strategize. He adapted. In doing so he applied GE's traditional tactic: fast following. This time, however it was not independent inventors or scientific breakthroughs that GE followed fast. It followed the national trend of deindustrialization and the rise of finance. The measure of a company had changed from progress of products to evaluation of net worth — that is, multiplying its stock price by the number of shares. Jack Welch read this trend accurately, and followed it fast. By the year 2000, GE, thanks largely the booming profits of its financial business, would have a net worth of $500 billion, briefly the highest net worth of any company in the world.
For his role in achieving this performance Jack Welch received in the year 2000 a total compensation of $16.7 million. That was some 250 times as large as the year annual compensation of the typical employee. By contrast, GE CEO Gerard Swope's compensation in the 1930s was about $60,000. That was about 25 times as large as the annual compensation of the typical employee. (612)
How did the end of the Old GE matter to the wider world? Unlike the electrification of America, the financialization of GE probably did not make much difference to the wider world. The financial irresponsibility of the late 20th century probably would have brought on the 2008 financial crisis even without the help of GE Financial Services.
A positive GE contribution to the nation and the world came from those parts of GE that Jack Welch did not throw overboard. In improving aircraft engines, helping innovate medical diagnostic devices, and developing high-efficiency combined cycle electricity generation, GE continued to make contributions valuable to the general public. Set against this was a negative contribution. GE was an important part of the manufacturer-utility-government complex that bungled the introduction of civilian nuclear power. By the late 1980s, the growing reality of climate change suggested that the world might have a use for carbon-free nuclear power after all. By then, however, nuclear was thoroughly discredited by its own economic woes and the public's opposition.
The New GE would also affect the wider world by helping to erase the old idea that a giant corporation should possess any unifying public purpose beyond maximizing market value — a public purpose, for example, such as electrifying America. For Jack Welch and his New GE, maximizing market value was all that mattered. In accepting that Wall Street criterion, Welch also, though perhaps unwittingly, put GE back into the Wall Street shackles that Charles Coffin had taken off by 1907. For the rest of the 20th Century, Welch would record an unprecedented winning streak of fulfilling his quarterly profit predictions. Wall Street would cheer, and ask few questions.
In the 21st century, that streak would end. That $500 billion market value would steadily decline. Wall Street would stop cheering. Instead, it would start asking Harold Geneen's question: why GE?
Notes
- Business Week. 1972. "GE's Strategy for Faster Growth." July 8, 1972.
- Ralph Alpher Oral History 14 May 1981. General Electric Hall of Electrical History Collection, MiSci.
- Sources tracing the fate of nuclear power in the U.S. used as the basis of the following discussion of nuclear power include Mahaffey, James. 2009. Atomic Awakening. Pegasus; Matuzan, George and Walker, J. Samuel. 1984. Controlling the Atom. [free PDF viewer required] U. Cal; Campbell, John L. 1988. Collapse of an Industry. Cornell. Duffy, Robert J. 1997. Nuclear Politics in America. Kansas. Bupp, Irwin and Derian, Jean Claude. 1978. Light Water. Basic Books. Weinberg, Alvin. 1994. The First Nuclear Era. Springer.
- GE Monogram. March-April 1982. Vol. 39. p. 2
- U.S. Office of Technology Assessment. 1984. Nuclear Power in an Age of Uncertainty. [free PDF viewer required] OTA-E-216. p. xi.
- Wellock, Thomas, 2012, Engineering Uncertainty and Bureaucratic Crisis at the Atomic Energy Commission, 1964-1973. Technology and Culture. 53. 846-884. Dr. Wellock also provided further clarification of the ECCS issue via a personal communication.
- Weart, Spencer. The Discovery of Global Warming. Harvard confirms that it was only in the late 1980s that the transition of climate change from hypothesis to knowledge began to influence the public.
- Adam Tooze. 2023. Speech to Davos International Forum. 15 Feb 2023.
- McKittrick, John B. to Corporate Executive Staff, Power Generation Study. 12 May 1972. John Fisher Papers, MiSci.
- Fisher, John. 1974. Energy Crises in Perspective. Wiley; Fisher, John. 1974. Prospects for Energy Self Sufficiency in the U. S. NAS Draft 7 Jan 1974 and Talk to Energy Goals and Environment Conference, 4 Nov 1971. John Fisher Papers. 2018-005. MiSci.
- Lee, Thomas H., Ball, Ben; Tabors, Richard. 1990. Energy Aftermath. Harvard Business School.
- Data on this deceleration is in Ayres, Robert and Leslie, and Vladimir Pokrovsky. 2004. On the Efficiency of U.S. Electricity Use Since 1900. [free PDF viewer required] International Institute of Applied Systems Analysis Report IR-04-027.
- I was there, in the projection booth, pushing buttons to advance the carousels, and observing the occasional dozing off and Jones' brief responses.
- I supplied the Steinmetz story to the Vice Presidential speechwriter, who was at the event and told me these details soon afterward.
- Recordings of these meetings were listened to by lower level company employees, including me. The sharp contrast described above was evident to all of us.
- Giaever, Ivar. 2017. "I am the Smartest Person I Know": a Nobel Laureate's Difficult Journey. World Scientific.
- Robb, Walter. 2017. Taking Risks. Leon Janssen.
- The discussion of GE innovations in medical technology that follows relies in part on Morone, Joseph. 1992. Winning in High Tech Markets. Harvard Business School Press. pp. 27-64, and on the story I told in a report I produced for GE entitled Research and Results.
- Interviews with R. W. Redington, A. C. M Chen, and W. Berninger. Oct 1982.
- Interview with Rey Whetten, 27 Jan 2023.
- Interview with Howard Hart 27 Jan 2023. This section also benefits from many conversations in the 1980s and 1990s with Bill Edelstein.
- GE Monogram Vol. 58. Mar-Apr 1981.
- Dance, W. David. Memoirs. Privately Printed 2007. pp. 116-117. Stanger's role is also emphasized in a history of the New GE, Cohan, William D. 2022. Power Failure. Penguin.
- Stern, Philip M. 1988. The Best Congress Money Can Buy. Pantheon. p. 289.
- GE Annual Report 1984. King, Ralph. 1988. Last Laugh. Forbes 22 Feb 1988. I was in the audience when Jones made that prediction.
- Hector, Gary. 1985. GE Credit Corp Braces for the Tax Reformers. Fortune 5 Aug 1985. King, Ralph. 1988. Last Laugh. Forbes 22 Feb 1988.
- Admirer: Welch's speechwriter, Lane, Bill. 2008. Jacked Up. McGraw Hill. p. 113, 117, 121. Less favorably disposed: Christopher M. Byron. 2004. Testosterone, Inc. Wiley. pp. 43, 123, 206.
- "General Electric: the Financial Wizards Turn Back to Technology." Business Week. 16 Mar 1981.
- I was there also, watching one of those Welch sessions without the distraction of carousel button pushing.
- Discussion with John Flock, 5 Feb 2024.
- Sources for the GE robotics and numerical control story include James A. Baker, "Robots, A GE Perspective" Presentation to Society of Manufacturing Engineering Executives, Chicago 30 Sept 1981. Business Week, 16 Nov 1981, p. 58F. "The Machine Shop Computer Arrives at Last", Business Week, September 13, 1976, 44R; Robert W. Breiken, the NC Story, GE General Management Meeting, 1/15/84, SN, General Electric Hall of Electrical History Collection, MiSci; GE Monogram, Winter, 1987, p. 14. Interview with John Cassidy, 7 October 1986. GE Monogram, Winter, 1987, p. 14.
- Davis, Amanda. 2022. Remembering LED Pioneer Nick Holonyak. IEEE Spectrum. 30 Sept 2022. Online.
- Kannellus, Michael. 2016. GE's Long, Lumpy History in Energy Efficient Lighting. Forbes.com 1 Feb 2016.
- Magaziner, Ira and Patinkin, Mark. 1989. The Silent War. Random House. pp. 67-100. Meeker, William Q. 2015. Pitfalls of Accelerated Testing. National Renewable Energy Laboratory Presentation. 22 Feb 2015. O'Boyle, Thomas. 1990. Chilly Tale. Wall Street Journal. 7 May 1990, p. 7.
- Patel, Sonia, 2019. What Drove the Gas Turbine Technology Leap at GE Over the Past 70 Years? POWER Magazine. 30 Jul 2019, online.OSTI.gov. 1978. P.L. 95-620, "Power Plant and Industrial Fuel Use Act" (1978)." This act prohibits: the use of natural gas or petroleum as a energy source in any new electric powerplant; "A contemporary view of 1970's combined cycle prospects is Meeting at GPV Services Corp. to discuss the combined cycle. 10 Dec 1971. John Fisher Papers. MiSci.
- John B. McKitterick to Corporate Executive Staff. 12 May 1972. John Fisher Papers. MiSci.
- Lee, Thomas H.; Ball, Ben; Tabors, Richard. 1990. Energy Aftermath. Harvard Business School. p. 128, 189.
- Oreskes, Natalie et al. 2023. Assessing Exxon's Global Warming Projections. [free PDF viewer required] 13 Jan 2023. Online.
- Richard Alben. Interview 13 Jan 2023. Malcolm Mc Nelly, Power Systems Operation, to VP H. R. Hill 17 Jan 1972. John C. Fisher Papers. MiSci.
- R. L. Crowther to Donald R. Mack, 13 Dec 1986. GE R&D Center Papers. MiSci.
- The discussion of PCBs that follows draws on National Research Council. 1979. Polychlorinated Biphenyls. National Academy of Sciences. Toxics on the Hudson. [free PDF viewer required] Und. Cleanupge.org/pcbarticle.html. Schmidt, Charles W. 2001. Of PCBs and the River. Chemical Innovation. 31-48-52. U.S. EPA. 2023. Hudson River PCBs Superfund Site. Actions Prior to EP's February 2002 Record of Decision. Epa.gov/hudsonriverpcbs
- The encounter between Welch and Daly is described in detail in Daly's obituary, New York Times 23 Dec 2022.
- GE Monogram. Winter 1983-83.
- GE Monogram. Mar-Apr 1979. 56.5
- Langlois, Richard. 2023. The Corporation and the 20th Century. Princeton. p. 454.
- Berkshire Eagle 1 Feb 1988.
- The above hypothetical tour of GE is based on notes taken during an actual tour of GE operations by this book's author as part of a study of GE operations commissioned by the GE Corporate Staff. The following Schenectady observations are based on 1985-1986 notes taken by the author at home in Schenectady.
- Interview with Don Brownhill, GE Power Systems, 9/5/85.
- Quoted in Chakrabarty, Subrata. 1988. When Everything's for Sale You Lose Something. Forbes. 12 Dec 1988. pp. 34-35.
- Information in 1950 U.S. Census.
- Purcell, Theodore and Cavanaugh, Gerald. 1972. Blacks in the Industrial World. Free Press. pp. 101-120. See also Purcell, Theodore V. and Mulvey, Daniel P. 1971. The Negro in the Electrical Manufacturing Industry. U. Pennsylvania, p. 3.
- GE Annual Report 1986, p.64.
- Frydman, Carola. 2008. Learning from the Past: Trends in Executive Compensation. [free PDF viewer required] CESIFO Working Paper No. 2460. New York Times 6 Sept 2002.