Friday, 27 September 2013

GE company profile/list of crimes

General Electric
by Charlie

For the latest company profile on General Electric, visit our corporate malfeasance wiki,

General Electric Co. manufactures electrical equipment, lighting products and household appliances. It also owns the broadcasting network NBC. In terms of market capitalization, GE is the world's second largest company and also second in the BrandZ ranking. In the 1960s, aspects of U.S. tax laws and accounting practices led to a rise in the assembly of conglomerates. GE, which was a conglomerate long before the term was coined, is arguably the most successful organization of this type.
Global Fortune 500 position: 11
Ownership status: Publicly traded
Number of employees worldwide: 315,000
Chief executive officer: Jeff Immelt
Tel: 203-373-2211
Corporate accountability
Accountability overview: 
In their 2002 report, ""Titans of the Enron Economy: The 10 Habits of Highly Defective Corporations," United for a Fair Economy gave a "special Lifetime Achievement Award" to General Electric "for scoring the highest average rank across all 10 bad habits, the only company to outrank second-place Enron. GE exceeds Enron’s score by an astonishing 45%."
Defense Contracting Fraud
On July 23, 1992, GE pled guilty in federal court to civil and criminal charges of defrauding the Pentagon and agreed to pay $69 million to the U.S. government in fines — one of the largest defense contracting fines ever. The company said in a statement that it took responsibility for the actions of a former marketing employee who, along with an Israeli Air Force General, diverted Pentagon funds to their own bank accounts and to fund Israeli military programs not authorized by the United States. Under the settlement with the Justice Department over violations of the Foreign Corrupt Practices Act, GE paid $59.5 million in civil fraud claims and $9.5 million in criminal fines.
GE’s civil and criminal transgressions stemming from the Israeli military program are by no means isolated. GE is a repeat offender when it comes to Defense Department fraud. The company has repeatedly violated the False Claims Act — a measure originally proposed by Lincoln to protect federal coffers. When the Project on Government Oversight surveyed defense contractors, it found that General Electric was responsible for 15 instances of fraudulent activity in just a four year period (1990-1994) — more than any other defense contractor.
On August 10, 1995 the U.S. Department of Justice announced (# 95-438) that GE would pay $7.1 million to settle a contract fraud suit initiated by Ian Johnson, an engineer at GE's Aircraft Engines plant in Evendale, Ohio in 1993. Johnson had alleged that GE "sold several thousand jet engines to the military that did not comply with military electrical bonding and electromagnetic interference testing requirements," according to DoJ. (Subsequently, the Air Force tested the engines and found them to be safe.) Johnson filed the suit on behalf of the United States under the qui tam provisions of the False Claims Act.
On January 10, 1997, the U.S. Department of Justice announced (# 97-012) that GE would pay $950,000 to settle allegations that it fraudulently misrepresented that it had conducted certain test procedures on circuit boards for hundreds of aircraft engine controls when in fact the tests were not conducted. GE paid $5.87 million (along with Martin Marietta) to settle a qui tam suit associated with improper sales of radar systems to Egypt.
GE paid fines between 1990 and 1994 ranging from a $20,000 criminal fine to a $24.6 million civil fine for a variety of defense contracting frauds, including: misrepresentation, money laundering, defective pricing (2 incidents), cost mischarging (3 incidents), false claims, product substitution, conspiracy/conversion of classified documents, procurement fraud and mail fraud.
On July 22, 1992, GE "... [pled] guilty to diverting some $26.5 million from the U.S. foreign military aid program used to finance General Electric's sale of F-16 jet engines and support equipment to Israel ." (United States v General Electric, Docket #90-CV-792, US DC SD OH, Cincinnati) (See: Defense Contracting: Contractor Claims for Legal Costs Associated with Stockholder Lawsuits, GAO/NSIAD-95-66 (July 1995) GE was convicted on February 3, 1990 in U.S. District Court in Philadelphia of defrauding the government out of $10 million for a battlefield computer system. GE pled guilty on May 19, 1985 to charges of fraud and falsifying 108 claims on a missile contract. GE was convicted of defrauding the Air Force out of $800,000 on the Minuteman Missile Project. GE was convicted of bribing the Puerto Rico Water Resources Authority.
Violations of Securities Laws
On September 24, 2004, the SEC announced (# 2004-135) that it had settled charges against GE for failing to fully disclose in proxy statements issued between 1997-2002 all of the retirement benefits granted to former CEO Jack Welch.
Tax issues: 
For examples of facility-specific GE tax-abatements up to 2001 see "GE Tax Abatement Ripoffs" published by Multinational Monitor.
History of GE Labor Relations
Radical groups like the Industrial Workers of the World won converts at General Electric during the First World War and staged a major strike at the company in 1918. This upsurge of militancy was short-lived, however. During the 1920s GE, like many other companies at the time, indirectly discouraged independent unionization (there was a company union) by engaging in a form of welfare capitalism. At the same time, GE president Gerard Swope met secretly with the head of the American Federation of Labor and said the company would accept being organized as long as it was on an industry rather than a craft basis. The craft-oriented AFL was not ready for such an idea.
When the Depression hit, GE instituted work-sharing plans and made loans to its employees. Yet this was not enough. The 1930s saw the rise of widespread industrial unionism in the electrical equipment business, especially after the creation of the United Electrical and Radio Workers Union (UE) in 1936. That same year GE consented to a request from the UE for a representation election at some of the company's main facilities. The UE won the vote and before long had much of the company organized.
After the war the UE pushed for substantial wage improvements but in the new Cold War climate it found itself under attack because of charges of Communist Party influence in the union. The UE was raided by others unions, and, after ceasing to pay dues to the CIO, the UE was expelled from that organization. In place of the UE the CIO chartered a new union called the International Union of Electrical, Radio, and Machine Workers (IUE). The UE lost members to the IUE and was a target of McCarthyism in the 1950s.
Eventually the UE and the IUE realized they needed to cooperate to be able to confront companies like GE effectively. This was especially important because in the 1950s the company adopted a labor relations policy known as Boulwarism. This approach, named after labor relations director Lemuel R. Boulware, involved making a supposedly reasonable proposal and adamantly sticking to it rather than engaging in back and forth negotiations. In other words, the company's initial offer was its final offer.
The UE and IU began to cooperate in the 1960s, and after a series of strikes in the latter part of that decade, they managed to get the company to soften its hard line in labor relations. (A National Labor Relations Board ruling that Boulwarism was an unfair labor practice also helped.) Whatever progress was made was largely lost in the 1980s as chief executive Jack Welch ruthlessly set out to eliminate jobs as part of his restructuring of the company. Numerous unionized plants were shut down, with the work transferred to non-union facilities in the South or low-wage havens such as Mexico. Although GE was far from unprofitable, the company began to demand wage and benefit concessions or work-rule changes from those unionized workers who were not terminated. GE workers began to make up some lost ground in national contracts negotiated in mid-1991. The wage increases were modest, but workers got major improvements in medical benefits.
Welch applied his same labor-squeeze policy at NBC after GE purchased the network in 1985. Management demanded major concessions from the National Association of Broadcast Employees and Technicians in the 1987 contract talks, prompting a walkout by 2,800 members of the union. After 17 weeks NABET, whose striking members were quickly replaced by NBC, called off the strike without winning a single major concession from the company. NBC, on the other hand, won the right to hire temps to fill jobs previously done by regular staff members. The network went on to eliminate hundreds of jobs and to introduce the use of robot cameras in some of its shows.
GE also has a less than sterling labor record abroad. In 1988 the International Metalworkers' Federation held a convention of delegates from GE factories in 23 countries. Reports delivered at the gathering showed that the company was depressing wages and weakening unions just about everywhere. Some of the strongest antiunion postures were taken by GE in Brazil and Colombia.
GE’s business model can be considered a global system of management by stress, with the company viewing stress and the fear of job loss as the magic formula for productivity and efficiency.
Retirees say the company has used accounting gimmicks and other means to reduce their pensions.
According to Multinational Monitor magazine, the Occupational Safety and Health Administration (OSHA) cited GE for at least 858 violations of OSHA rules from 1990 through March 2001. From 1994 to 1999, OSHA cited GE for at least 98 “serious” violations. OSHA issues “serious” citations to companies for conditions posing “a substantial probability that death or serious physical harm could result.”
Employment Discrimination
A black worker at GE’s Burkville, Alabama plant filed a suit claiming that General Electric officials fostered a racially hostile environment. GE reached settlements with two ex-GE employees employed at the plant. The workers claimed they were subjected to Ku Klux Klan symbols, swastikas and a hangman’s noose at the plant.
In 1991 GE was assessed over $ 590,000 in association with a disability claim for its refusal to reasonably accommodate a machinist with a back injury. A jury awarded $1.2 million in damages, which the district court reduced to $300,000 in accordance with the statutory cap on ADA damages. The machinist was also awarded $141,110 in front pay and $150,837 in attorney’s fees, according to the ADA newsletter.
For current information about GE workers, also see the Coordinated Bargaining Committee at GE (a coalition of 13 unions) and the UE for more information.
Environment and product safety: 
Persistent concerns about PCB contamination of the Hudson River from two GE manufacturing plants in Hudson Falls and Fort Edward have caused EPA to study the issue on a continuous basis since the site was listed on the nation’s Superfund priority site list in the early 1980s. Finally, on December 6, 2000, after 16 years of studies, proposals and more studies, EPA announced a 5-year plan to dredge 2.65 million cubic yards of PCB-contaminated sediment along a 40-mile stretch of the river. The cost of EPA’s proposal to GE: $460 million. The high cost of the cleanup has led company officials to mount one of the biggest public relations campaigns ever waged around a toxic waste site. Although EPA and the company signed a Record of Decision agreement in 2002 and numerous cleanup agreements after that, remediation is still not scheduled to begin until at least 2009. (For more information also see Clean Up GE)
Until reaching an agreement with EPA, GE denied the problem, sometimes with outright distortions of the truth. At an April 22, 1998 shareholder meeting, GE CEO Jack Welch claimed: “PCBs do not pose adverse health risks.” Testifying in Albany on July 9, 1998, EPA Administrator Carol Browner stated: “GE tells us this contamination is not a problem. GE would have people of the Hudson River believe, and I quote: ‘living in a PCB-laden area is not dangerous.’ But the science tells us the opposite is true ... And concern about PCBs goes beyond cancer ... The science has spoken: PCBs are a serious threat...”
PCBs from GE have also contaminated the Housatonic River in Connecticut, as well as in or near the Coosa River Basin in Georgia (traced to GE's Rome, Georgia plant).
On May 30, 2003 US EPA announced that GE would pay a $ 94,380 penalty to settle a TSCA enforcement action related to the improper storage of PCBs at its Pittsfield, MA facility.
Other Pollution Issues
On March 26, 1998, General Electric agreed to pay a $92,000 fine for previous violations of environmental reporting requirements for toxic releases at its silicone manufacturing plant in Waterford, New York, according to EPA’s regional office. In addition, GE agreed to spend about $112,000 to upgrade local emergency response capabilities in surrounding communities. Between 1991 and 1996, EPA cited GE for 23 violations when toxic releases were un- or underreported. Chemicals involved include dimethyl sulfate, chlorine, 1, 1, 1, -trichloroethane, ammonia, and toluene.
On March 13, 1992, the Nuclear Regulatory Commission (NRC) issued a $20,000 fine against General Electric for violations of regulations at the fuel fabrication plant in Wilmington, North Carolina. On May 29, 1991, GE personnel accidentally moved about 320 pounds of uranium to a waste treatment tank. The danger of the mistake was that the size and shape of the waste container caused unsafe concentrations of uranium, which could have led to a nuclear accident. The NRC dispatched a special incident investigation team the same day and an inspection began two days later. The NRC found that the mistake was the result of lax safety controls.
According to documents obtained by Public Citizen under the Freedom of Information Act, GE-designed nuclear reactors around the world have a design flaw that make it virtually certain (90 percent) that in the event of a meltdown, radiation would be released directly into the environment and into surrounding communities, leaving the public without any protection. The NRC acknowledges that the reactor containment structure in GE-built nuclear power plants does not work, but they licensed the reactors anyway. (Also, a dozen or more GE-designed boiling water reactors in the United States and abroad have evidence of cracking in the reactor core shroud — a metal cylinder surrounding the reactor’s radioactive fuel rods.)
On October 18, 2004, the California Department of Pesticide Registration announced that it would seek $202,959 in penalties for violations by GE's Betz Water business of the State of California’s pesticide registration requirements. The matter was ultimately settled in 2005 for $120,916, GE later explained in a letter to the Project on Government Oversight.
In August, 1996 the Florida Department of Environmental Protection informed Greenwich Air Services that it was seeking penalties of $278,555 for violations of the state's hazardous waste law at its Miami facility (the facility was subsequently acquired as a portion of GE's purchase of Greenwich which was consummated in September 1997). According to GE (10-K filed in March 1998), the matter was tentatively settled for $36,270 plus a pledge to perform a supplemental wastewater treatment project.
Human rights: 
In 1995, a Presidential Advisory Commission revealed details of GE’s human experiments with nuclear radiation. GE ran the Hanford Nuclear Reservation in Richland, Washington as part of the U.S. weapons program. Beginning in 1949, General Electric deliberately released radioactive material to see how far downwind it would travel. One cloud drifted 400 miles, all the way down to the California-Oregon border, carrying perhaps thousands of times more radiation than that emitted at Three Mile Island.
In 1986, Representative Edward Markey, D-Massachusetts, held hearings in which it was disclosed that the United States and General Electric had conducted experiments on hundreds of United States citizens who became “nuclear calibration devices for experimenters run amok.” According to Markey: “Too many of these experiments used human subjects that were captive audiences or populations ... considered ‘expendable’ ... the elderly, prisoners and hospital patients who might not have retained their full faculties for informed consent.”
One of GE’s most gruesome experiments — disclosed in the Markey hearings — was performed on inmates at a prison in Walla Walla, Washington, near Hanford. Starting in 1963, 64 prisoners had their scrotums and testes irradiated to determine the effects of radiation on human reproductive organs. Although the inmates were warned about the possibility of sterility and radiation burns, the forms said nothing about the risk of testicular cancer. Markey’s committee heard allegations that, at the time of the experiments, General Electric violated both civil and criminal laws.
Anti-competitive and consumer protection: 
GE was among four companies that ended up paying New York City over $4 million in 1982 to settle a lawsuit charging that wiring and cables in 754 subway cars were defective.
In 1992 GE agreed to pay $165,000 to settle a suit brought by 11 state attorneys general alleging the company deceptively advertised its lightbulbs. According to the state AGs, the ads promised consumers the same amount of light for less energy, but in fact the lightbulbs simply delivered less wattage.
GE Capital was ordered to pay $100 million for unfair debt collection practices as part of a 1999 class-action lawsuit settlement. The suit alleged that GE solicited agreements from bankrupt creditors to pay their credit card agreements without notifying bankruptcy courts of the agreements.
GE recalled 3.1 million dishwashers beginning in 1999, stating that a side switch could melt and ignite, presenting a fire hazard. In 2002, the CPSC announced that GE would pay a $1 million fine to settle allegations that the company knowingly failed to report the defects to the CPSC. (See the settlement agreement)
Unlawful Debt Collection Practices
On August 7, 1998, 50 States announced a $97 million settlement agreement with General Electric Credit Corporation (GECC) for unlawful debt collection practices from consumers who declared bankruptcy, in association with private label credit cards issued together with Montgomery Ward Credit Corporation. Under the settlement, GECC and Montgomery Ward Credit together paid an estimated $70 million to approximately 70,000 consumers nationwide from whom the companies collected invalid debts. In addition, the companies paid the states attorneys general $24.5 million. GECC also paid $3 million into a consumer education trust fund.
In April 2001, New York State AG Eliot Spitzer won a ruling in state court that, in connection with the dishwasher recall, GE falsely told consumers the problem could not be repaired, prodding customers with partial rebates to buy new GE dishwashers.
A November 1998 Time magazine profile of GE concluded that “[t]here is no starker example of the phenomenon of corporate welfare and vanishing jobs than General Electric Co.”
On July 14, 1998, the U.S. Department of Justice announced (# 98-327) a settlement with GE over anticompetitive practices involving restrictions GE had imposed in software licenses with more than 500 hospitals throughout the country. The restrictions prevented the hospitals from competing with GE to service medical equipment at other hospitals and at clinics.

Brief company history: 
Summary from World Class Business by Philip Mattera:
In 1879 Thomas Edison and his assistant Francis Jehl created the first long-lasting incandescent light bulb. The announcement of the device, which consisted of a carbon filament in a vacuum globe, made the stock market go wild. The shares of gas companies, which had dominated the energy business, plunged as investors flocked to the Edison Electric Light Company, a start-up firm financed by J.P. Morgan and Western Union president Hamilton Twombly.
Edison's vision of electricity transforming commerce and everyday life captured the imagination of the country. And Edison was determined to capture the market, both for light bulbs and for the energy needed to illuminate them. The wizard of Menlo Park set up the Edison Electric Illuminating Company to build the first central-station generating plant. He shrewdly chose as his initial service area a section of downtown Manhattan that included the financial district.
After the Pearl Street station successfully started operation in 1882, competitors rushed into the new business, both to generate electricity and to make light bulbs. Edison's poorly written patent application for the bulb was rejected, and the legal monopoly went to a rival. The rights to a refined version of that bulb were scooped up by an aggressive young inventor and entrepreneur named George Westinghouse, who also began producing generating equipment.
Despite the early setback, Edison's company made money expanding its service and licensing its equipment designs to others. Yet Edison the mechanical genius was less than brilliant as a manager. He missed a number of important opportunities and insisted on using direct current rather than alternating current. The latter, adopted by Westinghouse and other companies, allowed higher voltage power to be transmitted over much longer distances. Edison held to the belief that AC was too dangerous, and as a way of highlighting the point he urged New York State to use a Westinghouse AC generator in building the first electric chair.
The battle between DC and AC was only one of the many differences in standards among the various purveyors of electricity in any given city. The desire to resolve this problem and the quest for economies of scale prompted numerous generating companies to merge with one another. J.P. Morgan, the apostle of corporate consolidation, wanted to extend this to the manufacturing of electrical equipment. He gained control over Edison General Electric (formed in 1889 to consolidate the Edison holdings) and in 1892 combined it with another firm, Massachusetts-based Thomson-Houston, to form General Electric. Edison had no place in either the name of the new firm or its management. He went back to his laboratory, and GE, under the leadership of Charles A. Coffin, went on to become an industrial giant.
One of GE's major businesses was electric railways. Thomson-Houston had brought two such operations into the combined company, and the Edison side had included the Sprague Electric Railway and Motor Co., a pioneer in electric streetcar systems. GE gained a great deal of publicity by providing an elevated electric train line at the Chicago World's Fair in 1893.
Before long GE was dominating virtually all aspects of electrification in the United States--from generating and transmitting power to making the trolleys, motors (including large ones for industry), elevators, fans, and bulbs that used it. Around the turn of the century the company developed high-speed steam turbines, and in 1903 it acquired the Stanley Electric Manufacturing Co., whose founder, William Stanley, invented the transformer.
In 1900 GE established the country's first corporate research facility, which, among other things, improved on Edison's light bulb and devised the tungsten filament still in use today. In 1913 the lab developed the first X-ray tube, thus forming the basis of GE's medical equipment business. Later the research lab began doing early work on plastics as a result of its research on insulation for electric wiring.
Yet the company realized that electricity would have to be employed much more widely if its power generation and equipment operations were going to continue growing. Thus GE began to introduce new electric appliances, beginning with the toaster and iron in 1905. During the 1910s, GE came out with a waffle iron and an experimental household refrigerator. In 1918 the company merged with its two major competitors: Pacific Electric Heating Co., maker of the popular Hotpoint iron, and Hughes Electric Heating Co., which made an electric range. By the 1920s GE was selling an affordable household refrigerator and soon introduced vacuum cleaners, washing machines, and other electric devices for the home.
While GE's appliance business was blossoming, government concern about the company's market dominance was growing. In 1924 GE and Westinghouse were forced out of the power generating business, and a later antitrust action forced GE to make its light bulb patent available to competitors.
Meanwhile, GE was boldly entering new lines of business, most notably the young field of broadcasting. Following the achievement of the first wireless voice transmission in 1906, the radio business was being developed by the Marconi Wireless Co. of America; GE was also working on the technology. In 1919 the federal government was alarmed at the attempt of American Marconi, as the subsidiary of a foreign firm (British Marconi), to purchase certain essential patents owned by GE. As an alternative the Wilson administration worked with GE to create a new company called Radio Corporation of America (RCA), which absorbed the assets of American Marconi.
RCA, essentially a subsidiary of GE with a large minority interest owned by AT&T, was the vehicle by which a small group of companies attempted to dominate the new industry through the pooling of patents--so much so that soon after Westinghouse Electric entered the arena, it was invited to join the combine, as was United Fruit, which made use of radio to communicate with its banana boats going to and from Central America.
Westinghouse went on to create the first commercial broadcasting station in 1920, and soon radio stations were popping up everywhere and people were clamoring for listening devices. Tensions among the partners in RCA over who could do what led to a 1922 agreement that gave the phone company the exclusive right to produce and sell radio transmission equipment, while receiving apparatuses would be manufactured by GE and Westinghouse and marketed by RCA. In 1926 AT&T decided to quit broadcasting in exchange for a monopoly on wire connections between stations. That same year a new entity called National Broadcasting Company (NBC) was formed to operate AT&T's former stations and RCA's outlets. It was agreed that NBC--50 percent owned by RCA, 30 percent by GE and 20 percent by Westinghouse--would pay AT&T generous rates for guaranteed access to land-line connections.
NBC began its network broadcasting with a November 1926 gala production originating at the old Waldorf-Astoria Hotel in New York City and at other sites. By early 1927 NBC had two radio networks: NBC-Red and NBC-Blue. Although a competing operation called the Columbia Broadcasting System (CBS) was formed in 1927, the federal government felt that NBC was too dominant in the industry. In 1930 the Justice Department brought antitrust charges against RCA, GE and Westinghouse.
The industry was stunned but worked out a consent decree they could live with. The final deal was for GE and Westinghouse to give up their ownership interests in RCA. The latter was allowed to keep its radio manufacturing facilities, and GE and Westinghouse would be allowed to compete in that business after a 30-month interval.
GE kept up its stream of new products--including electric dishwashers and fluorescent lighting--during the Depression, but with the onset of the Second World War, the company shifted its focus to military needs. GE produced radar systems and power plants for ships while also building some of the first jet engines for airplanes.
After the war GE resumed production of its consumer goods, but also branched into new areas. Among these were silicone-based sealants and lubricants and, on a much bigger scale, nuclear power. GE produced the first nuclear reactors for submarines and, after the federal government opened up atomic energy to civilian purposes, nuclear reactors for power plants. Although orders slowed down after the last American nuclear facility was licensed in the 1970s, the company continued to manufacture Boiling Water Reactors (BWR) for sale abroad.
During the 1950s the company was a fount of innovations: among them were turbine engines for jet aircraft, gas turbines for electric power generation, synthetic diamonds, and self-cleaning ovens. GE's promoted the slogan "Progress is Our Most Important Product" and sent Ronald Reagan around the country as a good-will ambassador.
Yet the old bugaboo of the company--antitrust--returned to torment it. In 1961 the Justice Department indicted several dozen companies, GE among them, for criminal price fixing in the electrical equipment business. A couple of years before the indictments Senator Estes Kefauver had conducted an investigation that found that GE and its "competitors" were submitting identical bids to major customers like the Tennessee Valley Authority. All of the defendants decided to plead guilty to the charges. GE was fined $437,000 and ended up paying tens of millions of dollars in damages in civil suits brought by customers. Several company executives paid personal fines and received short jail sentences.
In the following years the company went through a massive reorganization, reducing the number of its operating units from some 200 to several dozen. GE also reassessed its position in the computer industry. The company had started making mainframes in 1956 and ended up as one of what were called the seven dwarfs trying to compete with industry giant IBM. In 1970 GE got tired of its losses in the business and sold out to Honeywell. GE later decided it needed a foothold in electronics and purchased semiconductor maker Intersil (though it was sold in 1988). As some of GE's core businesses--especially nuclear reactors--went into a slump in the 1970s, the company made a bold diversification move. It spent more than $2 billion in 1976 to acquire Utah International, a natural resources company involved in oil, uranium, copper, coal, and other minerals.
Utah added substantially to GE's earnings, but the larger company was still in something of a rut when Jack Welch took over as chief executive in 1981. The go-getter Welch set out to do something about that, vowing to retain only those businesses in which GE was number one or two. Over the next decade he sold and bought scores of operations. In the course of this shake-up Welch eliminated some 100,000 jobs, earning him the nickname "Neutron Jack." Among those businesses divested was Utah International, which (except for its Ladd Petroleum unit in the United States) was sold in 1984 to Australia's Broken Hill Proprietary. The houseware division (toasters, irons, etc.) went to Black & Decker. On the acquisition side, Welch made several dramatic moves. In 1985, amid a merger wave in the media, he agreed to spend $6.3 billion to purchase RCA and its subsidiary NBC, one of the big three television networks.
After GE had given up its interest in RCA in the 1930s the company, under the leadership of "General" David Sarnoff, played an important role in the development of television technology and became a leading military and civilian electronics producer, though like GE it abandoned the computer business. In the period before the GE buyout it was suffering from instability in its top ranks. Its NBC subsidiary, which in the 1940s was pressured by the federal government to sell one of its two radio networks (giving rise to the third network, ABC), moved aggressively into television in the 1950s, though it was later overshadowed in that medium by CBS. It was not until the 1980s, when the legendary programmer Grant Tinker took over, that the network was able to rise toward the top in the ratings war.
In addition to taking on RCA, GE got more heavily involved in financial services. The General Electric Credit Corp., founded decades earlier in order to help consumers finance the purchase of GE refrigerators, had come into its own in the 1980s by plunging into areas such as leasing. To this GE first added Employers Reinsurance Corp., bought from Texaco for more than $1 billion in 1984. Two years later GE went Wall Street by purchasing 80 percent of the investment banking firm Kidder, Peabody & Co. for $600 million. During the early 1980s Kidder, founded in the mid-19th Century, was propelled to the top ranks of the mergers & acquisitions game by hot-shot Martin Siegel, yet in the overall securities business it ranked only number 15.
Welch also resumed some of his housecleaning, extending the process of the assets of RCA. In 1987 he sold the combined GE-RCA business in consumer electronics (televisions, VCRs, etc.) to the French firm Thomson SA for cash (somewhere between $500 million and $1 billion) plus that company's medical diagnostic operations, adding to GE's existing strong position in that business. Thomson arranged to go on using the GE brand name.
Since the 1986 GE has had to contend with a boycott of its products launched by the organization INFACT to protest the company's involvement in nuclear weapons production. INFACT later extended its boycott to GE's medical products and succeeded in getting several major institutions to cancel orders for expensive diagnostic equipment.
In 1989 GE added a new dimension to one of its oldest businesses by agreeing to purchase 50 percent (later increased to 75 percent) of the Hungarian lighting company Tungsram for $150 million. Two years later GE took another step in Europe by acquiring the light bulb business of Thorn EMI for $360 million.
While Welch was admired for massively increasing GE's market capitalization (the value of GE’s shares grew from about $12 billion when he took over in 1981 to just under $500 billion twenty years later), he was also criticized for his ruthless management style.
During Welch's tenure, the shape of the corporate conglomerate also changed. By 2001 GE Capital -- a wholly owned subsidiary and financial arm of the company, involved in more than a dozen finance businesses including insurance, commercial lending, real estate, etc. -- was the world’s largest finance operation. GE Capital is the largest owner of aircraft, and manage more credit cards than American Express. GE Capital grew in importance from 8 percent of the company’s total earnings when Welch took over in 1981 to about 50 percent around the time of his retirement. The wider profit margins stimulated the company's shift from manufacturing to finance.
Author Thomas O'Boyle says that "until 1986 GE was the number one patentee of inventions every year in the twentieth century among all U.S. corporations, every year from 1900 to 1986. Now they’re not even in the top 20."
Financial information
Stock ticker symbol: GE
Total revenue: $163.391 billion
Fiscal year: 2006
Net Income: $20.829 billion
Fiscal year: 2006