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A review: Why GE’s CEO Jeffrey R. Immelt wants to cuts costs?

By Amarendra Bhushan for CEOWORLD Magazine Updated:October 27, 2008

GE hasn’t sold Consumer & Industrial (formerly Appliances) yet. They’re trying but so far no known bidders. Not much value in the appliance division when new housing is on the skids. The margins are slim enough with the high end products, but if new homes aren’t being built they don’t get manufactured and purchased. Immelt’s been trying to dump this business since he took over for Welch. He should have done so much earlier. He’s greedy like everyone else. Wanted to suck it dry and now it’s finished. GE’s problems are mostly a result of J. Welch and his wonderful management, and his wonderful plan to turn GE into a investment bank type organization. I saw him on CNBC a few days ago with the CNBC staff fawning all over him. It made me sick.

Earlier this month General Electric sold $3 billion in preferred stock to Warren Buffett’s Berkshire Hathaway Inc. Chairman and chief executive Jeffrey Immelt said that costs and employment would be lower in 2009 across the board, but he did not give numbers or percentages. The Wall Street Journal also said that GE’s president and chief executive of enterprise solutions Charlene Begley said her business had imposed a hiring freeze and was limiting travel costs.

In April, after the company posted an unexpected decline in first-quarter profits, Immelt raised the company’s cost-cutting goal to $3 billion from $1 billion, citing difficult market conditions. General Electric CEO Jeffrey Immelt is a hard man to pin down. He speaks in generalities, and what he says often does not turn out to be true. He has made sweeping comments about how well the company will do providing infrastructure services to countries like India and China. How often does he give a precise update on how that is going?

Now Immelt is talking about cutting costs and expenses at GE. According to The Wall Street Journal (subscription required), in an interview yesterday he said, “Costs will be lower in 2009 than in 2008. That will be true across the board.” He offered the observation that the cuts would include employees. How many? No one knows, and he is not saying.

Usually when a chief executives says his company will cut people, he either says how many or what percentage of the workforce it will be. That is not the case here. Immelt is keeping that to himself.

What is more remarkable than the man’s reticence is the fact that the company did not move sooner. GE’s results have been more modest that people would like The third quarter numbers were down right troubling. GE must have seen that coming. Where were the layoffs of thousands of people back then?

Immelt said he has not issued hiring freezes or travel restrictions but has identified such measures for potential cost-saving tools for business heads, The Wall Street Journal reported. Immelt said Friday that GE will continue to be active in areas such as loans to restaurant franchisees and companies under bankruptcy protection. He said new loans in those areas would decline this quarter, The Wall Street Journal said.

First, their entertainment division is taking a hit from competition and completely driving away 1/2 potential customer base.

Second, selling the house name product division was a poor move.

Third, banking division took a major hit from short selling and credit issues.

Fourth, the major revenue generation for the future, windmills, can’t get up to speed to offset the lost revenue.

Personally, I think that GE will become the next GM of the nation.

Jeffrey R. Immelt

“I’m out talking about this company seven days a week, 24 hours a day, with nothing to hide. We’re a 130-year-old company that has a great record of
high-quality leadership and a culture of integrity.”
— Jeff Immelt, Chairman and CEO

Jeffrey R. Immelt is the ninth chairman of GE, a post he has held since September 7, 2001.

Mr. Immelt has held several global leadership positions since coming to GE in 1982, including roles in GE’s Plastics, Appliance, and Medical businesses. In 1989 he became an officer of GE and joined the GE Capital Board in 1997. A couple years later, in 2000, Mr. Immelt was appointed president and chief executive officer.

Mr. Immelt has been named one of the “World’s Best CEOs” three times by Barron’s, and since he began serving as chief executive officer, GE has been named “America’s Most Admired Company” in a poll conducted by Fortune magazine and one of “The World’s Most Respected Companies” in polls by Barron’s and the Financial Times.

Mr. Immelt is also a member of The Business Council, and he is on the board of the New York Federal Reserve Bank.

Mr. Immelt earned a B.A. degree in applied mathematics from Dartmouth College in 1978 and an M.B.A. from Harvard University in 1982. He and his wife Andrea have one daughter.

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