It was three years ago next month that General Electric announced with much fanfare that it was moving its corporate headquarters to Boston from Connecticut. “We won the Powerball today here in Boston by having GE come here,” said Boston Mayor Marty Walsh on the day of the announcement. “For two decades we've had companies move out of our city, and now we have people moving into our city. I think that's a big win.” The move was to bring 800 jobs to Boston, but GE’s fortunes have been declining, its stock slumping. It's had three CEOs in the past year and a half. So what is happening? The Wall Street Journal has published a lengthy report on the company. It digs deep into the goings-on behind the scenes. Reporter Thomas Gryta is one of the journalists who worked on the story, alongside reporter Ted Mann. Gryta spoke with WGBH All Things Considered host Barbara Howard about the story. The following transcript has been edited for clarity.
Barbara Howard: The article talks about General Electric in the year 2000, arguably at the height of its value, worth $600 billion, with a third of a million employees back then. Tell us a bit about some of the things that the company had its fingers in.
Thomas Gryta: It's almost easier to say things it didn't have its fingers in. It owned NBC, it was still making appliances, light bulbs, power turbines, airplane engines, CAT scanners and MRI machines.
Howard: GE had a legendary CEO, Jack Welch. You write that he had a motto: Fix it, close it, or sell it. He sounds like he was pretty hard-nosed businessman.
Howard: So Jack Welch was there for 20 years, but then a new CEO was brought in, Jeffrey Immelt. Your reporting tells how he enmeshed in a deal to buy a French-based company called Alstom. His underlings, you wrote, were kind of uneasy about it.
Gryta: Right. There were people who were worried they were paying too much money for a company that was in really bad shape.
Howard: What stopped people under Immelt from saying, "Hey wait a minute, maybe not." Did he listen to people under him?
Gryta: He's absolutely a controversial figure. He was an optimist. He discouraged dissent, although he would never tell you that.
Howard: So while Immelt was buying this troubled French company, he's divesting GE of its capital division. GE is famous for making sure it had steady dividend checks going out to shareholders, and it leaned on GE Capital for that. But the capital division played another function. It kind of plastered over, you wrote, deficiencies in other divisions.
Gryta: That's right. If the industrial businesses weren't doing as well, you could use the financial services side to help the overall company look better.
Howard: So now he's buying Alstom. this French company, and GE Capital is on the auction block, in part because after the financial crisis. Immelt hated the regulations that were coming down. What did he do with the capital he got by selling GE Capital? What did he do with that money?
Gryta: Rather than buying assets or something that would produce earnings or cash, he simply bought back stock, GE's own stock. In hindsight, that was a terrible decision.
Howard: Did the stockholders know what was going on?
Gryta: I think it wasn't clear the extent to which the industrial businesses relied on the support of the financial services business. When GE Capital goes away, you are removing that which protected you.
Howard: Well the sale of GE Capital was happening in 2015, just as a deal to buy that French company, Alstom, was going through. This is about a year before GE announced it was going to be moving to Boston. Things were maybe unraveling, but Mr. Immelt kept an optimistic face on things. It sounds as though his underlings were skeptical, but maybe not vocal about their skepticism. Is that fair to say?
Gryta: Yes, I think that is fair to say. Part of what's core to this whole story is the mystique of GE. It's the idea that GE is so good at producing managers that if GE owned a business, it was worth more just because it was in GE’s hands. And I think that mystique or mythology or hubris really fed some of these decisions. It went down a road that was perilous, and things turned against it.
Howard: And now we've seen GE’s stock was taken off the Dow Jones Industrial. I mean, that must have been a blow.
Gryta: It's this acknowledgment that GE is no longer one of the most important companies in America, which is an astonishing thought for this company that basically helped build modern America.
Howard: So Immelt has left GE and another CEO, John Flannery, has come and gone. Now it's Larry Culp who is chief executive. I know you don't have a crystal ball, but what do you think all this means for the future of GE here in Boston?
Gryta: They have expressed a commitment to Boston in bringing those jobs and doing the things they're going to do. You know, what is the future of GE? GE is on its way to breaking up. GE will still exist. It may be a company that makes equipment for power plants, or makes jet engines, but it’s a different GE than Boston thought it was going to get.
Howard: That's Thomas Gryta of the Wall Street Journal. He and colleague Ted Mann are out with a report in the Journal on the declining fortunes of Boston-based General Electric. This is WGBH’s All Things Considered.