NEW YORK (Reuters) - Jack Welch, who brought celebrity and swagger to the General Electric Co GE.N executive suite in the 1980s and 1990s by transforming a conglomerate best-known for light bulbs into the most valuable U.S. public company, has died at 84, GE said on Monday.
Known as “Neutron Jack” for cutting thousands of jobs, Welch bought and sold scores of businesses, expanding the industrial giant into financial services and consulting. Under him, GE’s market value grew from $12 billion to $410 billion, making Welch one of the most iconic corporate leaders of his era.
But his push to build out the GE Capital financing business nearly proved the undoing of the entire enterprise during the global financial crisis more than a decade ago, and GE now trades at a fraction of its peak value.
“When the book about business leaders in this century is written, Jack Welch will be near the very top,” said Thomas Cooke, professor at Georgetown University’s McDonough School of Business. “What he did as the leader of GE was remarkable.”
President Donald Trump tweeted: “There was no corporate leader like “neutron” Jack,” adding his warmest sympathies “to his wonderful wife & family!”
In December 1980, it was announced he would succeed CEO Reginald Jones and in April 1981 he took over as the company’s eighth chairman and CEO. He served in that position until he retired in September 2001, succeeded by Jeff Immelt.
“Today is a sad day for the entire GE family,” said H. Lawrence Culp Jr., GE’s chairman and CEO, in a statement. “Jack was larger than life and the heart of GE for half a century. He reshaped the face of our company and the business world.”
Through streamlining operations, acquiring new businesses and ensuring that each business under the GE umbrella was one of the best in its field, the company was able to expand dramatically from 1981 to 2001.
Welch’s aggressive, in-your-face style and edict to be number one or two in every major sector was embraced by both management consultants and business school faculty, said Tim Hubbard, assistant professor of management at the University of Notre Dame’s Mendoza College of Business.
“It’s very difficult to predict how things would have worked out if Jack stayed on deck, but certainly what happened to General Electric after he left is not a very positive story,” said Hubbard. “The failure of subsequent CEOs underscores how important Welch’s leadership was to GE.”
A DIMINISHED CONGLOMERATE
After hitting its peak under Welch, GE’s scope narrowed and its market value fell under successor CEO Jeff Immelt. The company spun off much of its insurance business into Genworth Financial in 2004.
The transformation to industrials accelerated after GE needed a bailout during the 2008 financial crisis. In 2015, activist investor Nelson Pelz’s Trian Partners bought a $2.5 billion stake in GE and pushed for further focus on core industrial businesses, prompting Immelt to sell of most of the remaining parts of GE Capital.
Welch often faced criticism - particularly after he retired from GE - for his cavalier attitude about offshoring jobs and shutting down U.S. plants, a theme that has grown especially potent since the election of President Donald Trump.
The U.S. industrial belt is dotted with communities devastated by the downsizing of GE, which began under Welch and has continued in the years after. At its peak, for instance, GE employed 30,000 at a sprawling integrated industrial plant in Schenectady, New York, that now employs fewer than 3,000.
Both Welch’s style of management and the strategy he pursued to expand GE seem to have fallen out of favor. CEOs who order mass layoffs now get attacked in tweets from the Oval Office, and Wall Street has lost its appetite for conglomerates.
In 2012 Welch, who co-wrote a column with his wife Suzy Welch for media outlets including Reuters, sparked an outcry with a tweet suggesting the Obama White House manipulated job numbers for political gain.
ENGINEER BY TRAINING
Born in 1935, Welch received his B.S. degree in chemical engineering from the University of Massachusetts, and his M.S. and Ph.D. degrees in chemical engineering from the University of Illinois in 1960.
In 1960, Welch joined GE as a chemical engineer at its plastics division in Pittsfield, Massachusetts. He was elected the company’s youngest vice president in 1972 and became vice chairman in 1979.
In 1980, the year before Welch became CEO, GE recorded revenues of roughly $26.8 billion; in 2000, the year before he left, they were nearly $130 billion. The company was one of the most valuable and the largest company in the world at the time of his retirement, up from America’s tenth largest by market cap in 1981.
Under Welch, GE became a training ground for business leaders who often carried his ideas to other corners of the economy. Welch put a premium on training leaders though a tough system that targeted advancement only for those who showed the best results.
He continued this work after retirement, briefly teaching a leadership course at MIT’s Sloan School of Management and, later, founding an online MBA program called the Jack Welch Management Institute. That program is now part of Strayer University.
Books by Welch include “Winning,” from 2005, and “Jack: Straight from the Gut,” published in 2001.
“Before you are a leader, success is all about growing yourself. When you become a leader, success is all about growing others,” Welch wrote in “Winning.”
Reporting by Rachit Vats and Uday Kumar in Bengaluru, Jessica DiNapoli and Nick Zieminski in New York; Additional reporting by Scott Malone, Tim Aeppel, Alwyn Scott and Sweta Singh; Editing by Arun Koyyur and Edward Tobin
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