John Flannery is out as CEO of Boston-based General Electric. His tenure was short, a mere 14 months. His replacement, H. Lawrence Culp Jr., was announced early Monday. The shakeup is another blow to the optimism that accompanied GE's move to Boston from Connecticut in 2016. Reporter Greg Ryan of the Boston Business Journal discussed what's happening at the company with WGBH's All Things Considered host Barbara Howard. The following transcript has been edited for clarity.
Barbara Howard: So what happened to Flannery?
Greg Ryan: Well Flannery in a lot of ways was a victim of something that he did not do. GE, back in 2015, acquired the French power company Alstom. It really acquired that company at the exact wrong time. Demand for power worldwide has fallen since 2015, and the company announced today that it's taking a $23 billion charge. And it appears like after they made that realization, GE's board made the decision that Flannery had to go.
Howard: The newly appointed CEO, H. Lawrence Culp, is 55 years old. He appeared on the Harvard Business Review list of the top CEOs in the world. He's a lecturer at Harvard Business School, head of the company Danaher, it sounds like he's had a measure of success there. Does that bode well? Does it relate at all to GE's problems?
Ryan: It does in some ways and it does not in others. So Danaher, especially under Culp's leadership from the year 2000 through 2014, became a national and international conglomerate that had various types of business units under one roof. That's exactly what GE has been throughout its history. But in a way, it is getting away from that. A lot of people point to being a conglomerate as the source for some of its woes. So Flannery announced decisions such as selling off its massive healthcare unit, selling off its locomotive unit, and looking to sell off parts of the company rather than add on new ones. It's part of the conglomerate. So Culp has experience running a conglomerate, and he's been quite successful at it in the past, but in a lot of ways GE is trying to get away from being a conglomerate.
Howard: It seems like a lot has been shed. So what are some of the first moves you expect Culp to make at this point?
Ryan: According to the Wall Street Journal, Culp is planning to continue on with plans to sell off their healthcare unit and a few other units. He's not looking to make any changes there. It could be a question of timing. Reportedly, some members of the board and some of the largest investors are growing impatient with the pace, or with setting in terms of selling off these units. So if anything, we might see Culp move faster to shrink.
Howard: Around here, of course, we are concerned about the jet engine business plant in Lynn, What do these moves mean for those jobs?
Ryan: I think aviation, which is a division under which the plant in Lynn operates, there won't be many changes there. Aviation is one of the strongest performing units. I expect GE to hold onto that, and I don't think we'll see much in the way of change.
Howard: When GE moved from Connecticut to Boston, it had promised to build a big 12-story tower, bring 800 jobs. What's the status of all that?
Ryan: So as of just a few months ago, even with all of the struggles the company has gone through, GE maintained and Flannery maintained that there will be no changes to its plans for a Boston headquarters, including the new 12 story tower in the Fort Point neighborhood. We reached out to GE today to ask if there will be any changes for the headquarters. They declined to comment at this time. I mean, certainly there's a lot going on there, with the changes today, so maybe it will have a statement down the road. But you do have to wonder, and I'm just speculating here, with a new CEO coming into power, whether they might take that opportunity to review their real estate plans and decide maybe we don't need that 12-story tower considering all that's happened.
Howard: Did Massachusetts make a mistake?
Ryan: Well one good thing that Boston and the state did when they gave the tax break to GE is they tied it to the number of jobs. So if GE does not bring the promised 800 jobs, it will not receive a full tax break. And I believe that if it brings fewer than 400 jobs, and they're below that number now, far below that number, it will not receive any tax breaks, though there are some safety mechanisms built into the tax break. But considering the struggles GE has had ever since it moved to Boston, I'm sure people will still question the wisdom of offering to give the company that much money.
Howard: Thanks, Greg.
Ryan: Thank you.
Howard: That's reporter Greg Ryan of the Boston Business Journal. This is WGBH's All Things Considered.
This article has been updated.
