JEFF IMMELT STILL believed—in a General Electric that was forever, and in an idea of his own position as something closer to a public calling than another high-paid corporate sinecure. He and his closest defenders always emphasized that, when asked by President Obama to lead the President’s Council on Jobs and Competitiveness, he’d felt duty-bound to accept the task, General Electric being a part of the American civic fabric as well as the economy. And personally, Immelt had felt patriotically bound to honor his country’s request.
But serving on the Jobs Council had been a nightmare for Immelt. It was all exposure and no results in a still sluggish economy, and his visibility on the council only heightened the scrutiny of his company and himself. Internet pundits now declared Immelt, a self-avowed “center-right Republican,” to be an Obama stooge. And many people, both within and outside the company, hated the CEO’s attention being anywhere other than on the project of reviving GE’s lame stock price.
Then the country went and elected one of Immelt’s ex–TV performers president.
Some within GE’s upper echelon had shuddered at the election of Donald Trump. (And some cried.) But many were confident, as their peers were, that the volatile businessman and TV celebrity would be altered by the job.
After all, they had bent Donald Trump to their own ends before. In the 1990s, GE’s asset management division—the financial unit that made investments on behalf of the company’s huge pension funds—had foreclosed on a defaulted loan, taking ownership of the creaky old Gulf and Western Building overlooking Columbus Circle, the gateway to New York’s Central Park. The asset division had solicited bids to redevelop the dated structure from a slew of major New York developers, including Larry Silverstein and the Rudin family. They had also agreed to accept a bid from Trump, then at a low ebb brought on by serial casino bankruptcies and baroque tabloid coverage of his messy sex life.
Despite their doubts about Trump, the pension plan executives eventually decided that they liked Trump’s plan for renovating the office building into hotels and apartments and could make use of his notoriety and brand in getting the units to sell. “Jack was not exactly excited when I brought him that deal,” one said later. The executives had asked their external counsel, Sandy Morhouse of Dewey Ballantine, to lay out to Welch in writing the reasons that doing business with Donald Trump was worth the reputational risk to GE.
But the deal had worked, and what all sides remembered now was that they had made money.
Some GE executives chuckled years later at how Trump took credit, in his books and public remarks, for aspects of the development that they felt he’d had little to do with, like installing the high-end Jean-Georges restaurant in the tower as an anchor tenant. Still, at least one aspect of the development had been Trump’s brainchild, they noted: setting up the building as a condo-hotel, then an unusual arrangement in Manhattan, but an effective end run around local zoning.
Now Immelt, for his part, showed up at the White House. He laughed and chuckled among a group of CEOs at a gathering in the State Dining Room, seated across the room from the president, next to Vice President Mike Pence. Immelt had known Trump ever since they had launched The Apprentice together on NBC, the network then owned by GE. That show had rehabilitated the famously washed-up developer’s image, introducing him to a new generation of Americans not as a joke but as an apparent success.
Trump went around the long rectangular arrangement of tables, encouraging the corporate titans to remark on their excitement about his election and hopes for the future of the economy under a Trump administration. Immelt waited patiently for his turn to respond as a horde of reporters and cameras took it all in behind a velvet rope.
“Jeff actually watched me make a hole-in-one,” Trump said, arriving at Immelt’s place after receiving encomiums from the CEOs of Campbell’s Soup and Lockheed Martin. “Should you tell that story?”
Big Jeff obliged. Chuckling obsequiously, he related the story of Trump’s lucky eagle, a shot struck on the golf course as Immelt and NBC were laying out the terms of the deal for The Apprentice. Immelt delivered the punch line: Trump had proclaimed that he was the richest golfer in the world, the CEO said, to laughter from the crowd in the White House.
Now the president cut in to correct him. “I actually said I’m the best golfer of all the rich people.”
His large frame slightly hunched at the table in the opulent dining room, Jeff Immelt blushed and laughed along.
After the election, most companies weren’t looking to get noticed by the incoming president, who had already targeted AT&T and Boeing. It wasn’t clear how the new White House would treat businesses going forward.
Immelt often reminded people that he was a Republican, despite never quite shaking an association with President Obama after leading his jobs council, but wasn’t backing down on GE’s strategy or direction because of Donald Trump. Immelt embraced the situational pragmatism of the high-powered. His priorities were the company’s—deregulatory and laissez-faire—but ultimately mutable, in response to the needs of the moment, and contested only when the bottom line was truly threatened. That could lead to unexpected divergence from stereotype. For instance, when President George W. Bush rolled out his tax cuts, Immelt told one investor that the plan didn’t make sense. “Why cut my taxes?” he said, referring to his wealth. “Why not let the poorer people have it and spend it?”
The company and its leaders could also at times take a diametrically opposed position. GE had been able to point to few concrete impacts on its fortunes when it cited a progressive new budget law as its reason for storming out of Connecticut to move to Boston. (The company’s tax assets included enormous stores of financial losses that it used to hold its tax rate down; in most years, sources told the Journal, the company’s tax bill to the state amounted to the minimum: a filing fee of $250.) But that budget had significantly raised income taxes on the state’s rich, a cohort that included a lot of executives at General Electric, including those at the very top.
GE was a market leader: it validated trends and set the tone for other companies. As the quintessential American company, GE’s growth was America’s growth. And leaders like Immelt felt they didn’t run away from problems and that included a Trump presidency. The successful Trump campaign and the administration’s early moves were all rooted in a populist mercantilism that was the opposite of the worldview in which Immelt had overhauled the company.
After Trump’s threat to pull the United States out of multinational trade deals, Immelt used his annual letter to shareholders in February 2017 to remind them that GE was bigger than any one country.
“We don’t need trade deals, because we have a superior global footprint,” he wrote. “We see many giving up on globalization; that means more for us.” And Immelt didn’t shy away when Trump’s deregulation agenda conflicted with GE’s stance on climate change. “No matter how it unfolds, it doesn’t change what GE believes,” he wrote in a note to employees in March 2017.
The CEO was no dummy. Carving out distance from Trump, Immelt also carefully avoided criticizing his touchy former TV talent directly.
Amid the turmoil, and despite the pressures to perform, GE was still hunting for big deals. A team in the Aviation division had worked with bankers to put together a proposal to buy aerospace rival Rockwell Collins in late 2016. The deal pitch, worth more than $15 billion, reached Immelt in early 2017.
He scuttled it, to the frustration of those who saw such a deal as being far more lucrative than Alstom. But Immelt knew he was being watched and was determined not to drop the ball. He couldn’t afford Trian, or others, seeing yet another example of him seeming to bite off more than he could chew. Instead, GE kept repurchasing stock, spending more than $3 billion in the first four months of 2017.
GE Power, the unit that led all others in sales, was the centerpiece of Immelt’s new GE, and that was how he wanted it to stay. His frustrations with Bolze, who sometimes signaled that Immelt’s views of the market were aggressive, led him to reach out to Bolze’s underlings. Immelt knew the power of his influence, and he wasn’t above calling these subordinates to make sure they knew the stakes and to urge them to hit their targets. Bolze got wind of Immelt’s meddling, of course, to his annoyance. The relationship between the CEO and the chief of GE’s biggest division was splintering.
There were only so many service contracts to be renegotiated. Power was running out of future profits to pull forward. Its mysterious outperformance in a slowing market wasn’t going to last much longer. Cracks soon started to show. That April the company revealed the weakness hidden inside the Power unit with a single, startling figure: GE’s industrial businesses had burned through $1.6 billion in cash in the first quarter. That was about $1 billion worse than it had projected.
Bornstein insisted that it was just a matter of timing and that Power’s financials would rebound later in the year. Nevertheless, the news raised red flags about aggressive accounting and doubts as to whether the company could make its goals. Some saw these developments as little more than the same roller-coaster ride GE took them on every quarter. But others were concerned that it was a bigger problem than that. If Power was so strapped for cash, how could GE hit its $2 per share earnings target, on which Immelt had staked what was left of his credibility on Wall Street?
To close observers, there was a greater concern: Most of the shortfall came from the heart of the industrial business, Power’s service contracts. Services, as in any traditional industrial business, should have been the source of the easiest profits. Instead, the cavity in the heart of the service portfolio was about to tip the entire company into crisis.