At GE, an urgency to return to industrial

Company to shed business units worth more than $20b over the next year or two

General Electric’s new CEO is starting to lay out bold plans to return the conglomerate to its industrial roots by slashing costs and streamlining its operations.

John Flannery said on Friday that the company will shed business units worth more than $20 billion (Dh73.4 billion) over the next year or two.

Flannery, who has been on the job less than three months, is expected to provide more details next month on how he will put his own stamp on the Boston-based manufacturing giant. But he offered plenty of hints after GE’s latest disappointing financial results.

GE drastically cut expectations for the full year after its third-quarter profit fell more sharply than expected due to large restructuring charges. Flannery called the results unacceptable.

“It’s also clear from our current results that we need to make some major changes with urgency and a depth of purpose,” he said on a conference call with analysts.

The company’s shares slid 6 per cent in morning trading but recovered throughout the day. They ended regular trading up 25 cents at $23.83.

Flannery led GE’s health care unit until becoming CEO in August.

He replaced Jeff Immelt, who had reshaped GE after taking over from legendary CEO Jack Welch but couldn’t reverse a slump in the company’s stock while the overall market boomed. GE shares are down 25 per cent this year, the worst performer in the Dow Jones Industrial Average.

Immelt also came under fire for executive perks. GE acknowledged that on occasions an empty plane followed the CEO’s jet on trips, and one of Flannery’s first moves was grounding GE’s fleet of six corporate jets. Flannery has replaced several top executives.

On Friday, Flannery did not mention Immelt by name but said he was focusing on fixing GE’s “culture,” which he said “needs to be driven by mutual candour and intense execution, and the accountability that must come with that.”