WASHINGTON, DC, WAS unseasonably warm in late September 2010, when Jeff Immelt and a pair of company attorneys arrived at the William Jefferson Clinton Federal Building, the massive neoclassical home of the US Environmental Protection Agency.
GE and the EPA were locked in a long and bitter feud that stretched back decades over who was responsible for cleaning up the toxic mess in New York’s Hudson River. A pair of GE factories had pumped in more than a million pounds of toxic compounds for generations, turning one of the most famous and vital American waterways into a two-hundred-mile-long Superfund site.
The mere mention of the Hudson to Welch had been enough to set off a finger-pointing screed. Polychlorinated biphenyls, or PCBs, had been widely used in industry for decades. The compounds were found in lubricants and in the heavy-duty, fire-resistant insulating fluid inside the electrical capacitors that GE churned out of factories like those in Hudson Falls and Fort Edward, New York.
And it had been legal at the time, Welch would shout, to pump the excess fluid into the river. He was right that it was legal at first, but eventually, as study after study about the harmful effects of the chemical piled up, it stopped being legal. PCBs would eventually be classified as a likely human carcinogen. GE stopped dumping them in 1977, two years before PCBs were banned altogether. But PCBs still permeated the grounds of those factories and trickled from the sides of the Hudson Falls plant into the river for more than two decades.
After battling for thirty years, GE and the EPA were arriving at last at a moment of decision.
The GE contingent ascended to the building’s third floor, where they entered the Bullet Room, a long, wood-paneled conference room used for important meetings. The group included GE environmental lawyer Ann Klee, who had been hired largely because of her past service at the EPA, and the company’s patrician general counsel, Brackett Denniston III. Across the table sat a cadre of EPA officials led by Lisa Jackson, President Barack Obama’s first EPA administrator and a veteran environmental engineer and regulator.
To some in the room, the GE team seemed to think that they had sewn up a Hudson River deal to their liking. The company proposed capping the largest “hot spots” of contamination by sealing them with a bed of clay and soil. The GE team was in for a rude awakening.
The EPA and some local government officials hated this idea. Over time, they said, the river would slowly eat away at the caps and unleash the chemical. Jackson told the GE team, cordially but firmly, that GE would be responsible for digging up and removing the toxins from hot spots along some forty miles of the riverbed, the very remedy GE had hoped to avoid. The cost of disposing of the sludge also fell to the company, bringing the expected bill to around $2 billion.
Ann Klee, the GE lawyer and former EPA official, exploded.
“This is the wrong decision! We’re going to meet you in court,” Klee exclaimed. While the EPA might try to dictate how the second phase of dredging should play out, Klee said, “We’re not going to follow it.”
“She kind of lost it,” a person who attended said. “They thought they had a deal that didn’t exist.”
Denniston, his chummy glow gone, was silent. Immelt cut in, silencing Klee, playing the good cop. “Okay, we don’t have to decide this today,” he said.
Jackson coolly corrected him.
“Oh no, we’re deciding today,” the EPA administrator told the CEO. “This is done.”
The meeting ended quickly. As the GE executives departed, the only question that remained was whether the company would go along with the EPA’s plans—and foot the bill—or plunge the question of the Hudson River cleanup back into limbo by fighting the EPA in court.
It had been almost a decade since Immelt succeeded Jack Welch, and General Electric had come a long way in the public image it presented about environmental matters.
In 2002, the recently retired former CEO, clad in a cable-knit sweater, had raved in a televised interview with Bill Moyers that the EPA’s initial plan to dredge the bottom of the Hudson was “just nuts” and amounted to an attempt to “chase molecules in water.”
Rocking and gesticulating, Welch exclaimed, “The Hudson’s recovered, it’s wonderful, it’s beautiful,” before adding, in an aside that seemed to take Moyers aback, that he didn’t even believe that PCBs had been proven harmful to human health in the first place. The producers cut to experts explaining that multiple studies had found the compounds to be probable human carcinogens.
Jeff Immelt didn’t feel like paying billions to clean up a river either. Yet he was smart enough to see an advantage in updating GE’s public image on the environment. The company, for all the prowess of its engineering, tended to come off as an implacable ecological bad guy, and that didn’t fit with the sunny salesman’s idea of the GE image. He might at least avoid some of the confrontations that Welch had been drawn into as he fought against the environmentalists and lawmakers insisting that GE clean up the Hudson and other rivers that its factories had despoiled, especially the Housatonic in Massachusetts.
The lowlight came in late April 1998 in Cincinnati, the site of GE shareholders’ annual gathering. During discussion of a shareholder proposal for GE to do more about the polluted rivers, Welch dismissed the idea and declared that there was no danger to the public. One shareholder challenged Welch on that assertion, arguing that GE’s aggressive interpretations of scientific studies were comparable to those of tobacco companies trying to dodge responsibility for lung cancer. Welch exploded.
“That is an outrageous comparison,” an exasperated Welch exclaimed from the dais to the activist. “You owe it to God to be on the side of truth here.” Another shareholder yelled, “Sit down,” producing a round of applause.
To the consternation of GE’s public affairs office, the speaker being ridiculed was Sister Patricia Daly, a Catholic nun from New Jersey who had pushed for socially responsible behavior by corporations. The ruthless backlash became a symbol of GE’s relentless opposition to the issue and painted the company as hostile to environmental issues.
Beyond the issue of the New York river, there was the larger question—to GE anyway—of its brand. A carefully curated self-mythology had always been central to GE’s methods, going back to Edison. GE had marshaled the tools of public opinion that had marked every era—hence the cameos of Ronald Reagan and Kurt Vonnegut in its corporate archives and its sponsorship of general entertainment that stretched far afield from its direct interests, such as early live TV. When the company’s public relations efforts were working right, the result was a general good feeling about the company. Immelt was fond of citing the conclusion of a study that the brand might have been worth $50 billion—a sign of both its worldwide recognition and the impression that, whatever the reason it popped up in the news or at a congressional inquiry, the company was a vast organization of elite engineers who made vital equipment that helped the world run well. But this legacy brand advantage was shifting and changing in the twenty-first century, and not just because of the rising and reasonable skepticism about whether major public companies were doing good things for the right reasons. The pursuit of profit for shareholders had left a lot of ethical and moral gray areas.
GE was also in a long, slow process of changing its relationship with individual American consumers that had begun under Welch himself. When GE’s “We Bring Good Things to Life” was coined, the company could boast of selling Americans their radios, televisions, microwaves, stoves, refrigerators, air conditioners, and incandescent lightbulbs. Welch sold off units like these, such as the small appliance business, which made toasters and small kitchen goods. The few of those business lines that remained in GE’s industrial portfolio by the mid-2000s were essentially marked for disposal once both the market and the time were right. In fact, under Immelt, the quest to shed those humdrum legacy products was only accelerating.
Partly, shedding these units was the company’s natural response to an era of free trade and rising global competition in which American gadget manufacturers, especially those on the commoditized low end, simply couldn’t compete. But Immelt wasn’t exiting low-margin businesses like kitchen white goods and lighting to enter other sectors more prized by American consumers. The era of GE as a consumer-facing brand was ending. The meatball logo retained much of its power, still calling out from the aisles of hardware stores and appliance retailers, but thanks to quiet licensing deals made over the years, the logo could be found on gadgets that GE hadn’t actually made for decades, or had never made. (Among these products were a GE-branded computer mouse and a faux security sign meant to fool burglars into believing that a house was protected by a fictional GE alarm system.) Now more than ever, the company’s core customers would be institutional: hospitals, the military, utilities and power generation outfits, airlines.
As GE evolved into a more business-to-business company, it didn’t lose the need for popular support. A positive public understanding of a company like GE—that it was familiar, competent, homely, and ultimately good—would remain essential in rebuffing the untold misfortunes and scandals that could arise at any moment for such a huge and complex enterprise. Hence, the company needed to find another source of warm and fuzzy feelings about GE besides the familiarity with the brand customers felt as they plonked down a few bucks for a two-pack of 60-watt lightbulbs.
GE had been demonized before, after all. The company had suffered through college campus boycotts in response to the huge sums it made contracting with the US Department of Defense. It had been battered in the press following the tsunami-driven failure of nuclear reactors at Fukushima in Japan, a crisis that blindsided the company, which had produced those reactors four decades earlier; only a few people who even knew how they had been designed were still employed at GE. And though GE had licensed its logo for forty years to Haier to use in selling stoves and washing machines, that brand presence for GE represented only a compensated risk: a wave of exploding ovens could hammer the stock price, even though GE no longer had anything to do with building kitchen goods.
It helped in such instances to have seeded the mind of the public with a general idea of the company’s good intentions and competence—to have been nurturing a warm brand glow. And what GE needed to do this, in the eyes of Immelt and some of his closest deputies, was a story. The narrative of success begat success, and the imagination of excellence and innovation was the first step to achieving both. One of those Immelt allies would later put it succinctly: “Strategy is a story well told.” That executive was GE’s chief marketing officer, Beth Comstock.
General Electric’s pressure campaign against the EPA over the Hudson River had not just been waged in Washington. It had been fought most fiercely on the ground in Hudson Falls and Fort Edward, New York, two former GE factory towns full of loyal employees and retirees, as well as residents devoted to exploring and fishing in the river. The company funded websites, took out ads in local newspapers, aired infomercials, and broadcast TV spots that featured ominous footage of what it depicted as the EPA’s plan for the scenic waterway of the Upper Hudson: ruinous clamshell diggers and truck traffic, making a mess of the river bottom in the name of a cleanup. “You’ve just experienced twenty seconds of dredging,” one said, over shots of huge earth-moving equipment. “Imagine what twenty years would be like.”
The ads worked. Public resistance to dredging plans rose in the very communities most directly inundated by GE’s pollution, albeit with significant opposition from some who felt that the company’s efforts were heavy-handed and misleading.
“These people are really, really scared of what this project is going to do to their communities,” an environmental activist told a New Jersey legislative committee in June 2001 even as lawmakers hundreds of miles downriver from GE’s PCB pollution sites tried to pressure the company to go along with a cleanup. “Why are they afraid of what it’s going to do? They are afraid because General Electric’s public relations people have been telling them to be afraid. They’re afraid because General Electric has been spending millions of dollars to avoid culpability.”
The mainstream television ads that would come to define GE’s public image in the Immelt years took an entirely different approach. Whereas Welch, and Immelt in his earliest years, had pressed the company’s interests on the environment in the smashmouth tone of a congressional race, the tone of Immelt’s tenure, now set by Comstock, was imbued with the upbeat narrative stylings she had imported from NBC. Those stylings meshed perfectly with the boosterish sunny quality of Immelt’s style in telling the public gently, cutely, and vaguely how to think good things about the world’s most famous industrial company.
Immelt himself debuted a change of corporate tone when he unveiled a slate of new GE promises to hit environmental goals in a ballroom in Washington, DC, in the spring of 2005. On screens in the hall, a tranquil rainforest image appeared, along with the strains of a familiar tune as the action began: a CGI-animated elephant calf dancing through the jungle to “Singin’ in the Rain.”
“Water that’s more pure,” a narrator breathily intoned as the elephant tap-danced through a puddle. “Jet engines, trains, and power plants that run dramatically cleaner.”
The ad announced a new coinage of Comstock’s, produced out of one of the “imagination breakthroughs” she led with executives to launch new marketing campaigns and branding for the company. “Ecomagination,” GE said, was an effort to “create technology that’s right in step with nature.”
Ecomagination, the result of months of work and deliberation, had met with a fair amount of internal resistance to any attempt to rebrand GE as an ecologically minded entity, Comstock later wrote in her memoir. “You’re going to make us look like idiots!” one executive had bellowed upon a first viewing of the “Ellie the Elephant” ad.
The truth was that GE was hedging its bets and casting its lot with other businesses that had decided it was good for business to be seen as interested in protecting the environment. But “ecomagination,” in addition to being a mouthful, was also a bit of a stretch. GE did commit to concrete goals. It would cut its own greenhouse gas emissions and raise investment in research on “cleaner technologies” from $700 million annually to $1.5 billion by 2010, the company said in a press release. The company also aimed to double—from $10 billion to $20 billion by 2010—the revenue it generated from products and services that “provide significant and measurable environmental performance advantages to customers.” An independent environmental organization had been consulted to determine which GE offerings could qualify for inclusion in “ecomagination.”
But the initial list of seventeen products that Immelt boasted of that spring day in Washington showed that change was in the eye of the beholder. The offerings GE singled out as proof of its environmental conversion included: a new jet engine, called the GEnx, that had already been years in development and whose fuel efficiency would improve on the fuel efficiency of the older engines it replaced; the GE Profile Harmony washing machine, whose name had come from being “in harmony with the environment”; and Evolution, a new series of GE locomotives for the freight railroad industry that would feature greater fuel efficiency and cleaner emissions than the smoke-belching machines that came before. “Go ahead,” the promo copy for the locomotives encouraged, “take a closer look at this product of pure ecomagination.”
Was it, though? GE had hardly changed its business model in designing the GEnx engine to use less fuel. The engine was designed at the behest of Boeing, which wanted new power plants for its latest model 747 and new 787 Dreamliner. Those planes would be marketed to airlines that measured fuel by the drop as they struggled to eke out profit margins that were directly affected by the efficiency of the planes they flew. It was good news for the greater goal of reducing global carbon emissions that cost-consciousness was driving the aviation industry to seek greater efficiency (though greater efficiency was counterbalanced in part by a top priority of engine-makers like GE: to keep the number of global flight hours steadily rising so as to turn their engine fleets profitable). But GE’s efforts to improve jet engine fuel efficiency were hardly a result of a green epiphany among General Electric’s top executives.
As for the Evolution series of locomotives, the first preproduction units had gone out on the rails in 2004, a year before Immelt debuted ecomagination and the elephant danced. With substantial improvements in their emissions, the locomotives would be an enormous commercial success: hundreds of units were sold to freight railroads and mining companies around the world. But were they a “product of pure ecomagination”? The Evolution locomotive was, if anything, a product of the EPA, whose tightened emissions standards had compelled railroads to find locomotives less damaging to the environment—and thereby created for GE the incentive to invest in designing and producing them.
Nonetheless, the “imagination breakthrough” session had yielded a slogan that yielded GE a flood of mostly positive press clippings. Now the push was on. Ellie the elephant hit the airwaves, as would a series of cheery commercials in the months to come, emanating from GE’s longtime ad firm BBDO Worldwide, which pressed the corporate image as a font of industrial innovation, animated by thoughts of saving wild animals and the planet.
In one spot, workers assembling a power turbine break into a line dance; they are joined one by one by others on the factory floor, and then an unbroken stream of employees and customers around the planet join the line. It was like a Coke commercial with jet fuel and ecological wish-casting at its heart. In another, which the company called “Model Miners,” semidressed men and women strut about in headlamps in a coal mine, sensually brandishing jackhammers and picks, to the strains of “Sixteen Tons,” the American folk classic about miners sinking into debt. The punch line was a reference to “clean coal”: “Thanks to emissions-reducing technology from GE Energy, harnessing the power of coal is looking more beautiful every day.”
Some commentators noted the incongruity of using a song about the miseries of the twentieth-century mining life (“I owe my soul to the company store”) to extol the beauty of the coal business. There was also the usual tell of an appeal to the flesh: “One thing is clear, though,” Joshua Ozersky wrote in the New York Times. “Throwing oiled-up hotties at the camera is, in commercials as in hip-hop videos, usually a sign you don’t have anything to say.”
Some environmentalists who had fought GE for decades, not just on the Hudson cleanup but on the company’s broader track record on pollution and emissions, were appalled. But ecomagination mostly worked. The clips unspooled in a wave: old GE was turning over a new environmental leaf and pledging to make money doing so. Forbes, for instance, weighed in that August (“GE Turns Green”), albeit with a nod to the fact that some of ecomagination amounted to “showmanship.” (Forbes was skeptical of GE’s apparent capitulation to environmentalists, but it did like the models.)
“In its essence it’s a way to sell more products and services,” Immelt told the magazine. On another occasion, he said simply, “Green is green.”
And with the rising of one of GE’s most ambitious marketing campaigns, the star of Beth Comstock rose as well. She had been named GE’s first chief marketing officer in a decade. She was headed higher.
On December 16, 2010, Lisa Jackson had a ten-minute hold on her calendar for a call with Jeff Immelt. GE had pecked away at the EPA and its dredging proposal, seeking alterations in the government’s plan that would limit the amount of dredging GE would have to pay for in the Upper Hudson—anything to hold down the cost of the cleanup that now seemed inevitable. Inside the EPA, officials waited anxiously to hear whether GE planned to fight the proposed cleanup plan in court. A lawsuit might only postpone the inevitable for the company, but every year of postponement was another year of accumulation, the PCBs building up in the tissues of the wildlife in the Hudson. Still, the agency held firm, refusing to make changes to its proposed remedy. Now Jackson was calling the CEO, to tell him the EPA would announce the details of its dredging plan at 11:00 A.M. the next morning. After thirty years of fighting about the issue, GE would be on the hook to take a sizable chunk of the pollutants out of the river.
At 8:00 A.M., two days before Christmas, a GE press release hit the wire, bearing the dry headline “GE Statement on Previously Discussed Fourth-Quarter 2010 Items.” Regulatory approvals were coming along, it said, for GE’s sale of a majority stake in NBC Universal to Comcast and that deal was expected to close in January, later than expected. The press release then said that GE had informed the EPA that it would comply with the agency’s order and carry out the Hudson River dredging project’s second phase.
“We engaged in intensive and constructive discussions with the EPA, and the decision reflects our discussions and many of our proposals,” the statement said.
The press release closed with a note of reassurance for investors: “We expect this to resolve future uncertainty regarding Hudson dredging liabilities and to result in an after-tax charge of about $500 million in the fourth quarter. As discussed on December 14, we expect that positive items, including a favorable tax settlement, will offset this charge.”
It was a smaller remedy than environmentalists and some local officials wanted. But GE would finally be digging up some of what it had dumped in the river.