Book Review:
At Any Cost:
Jack Welch, General Electric,
And the Pursuit of Profit

At Any Cost: Jack Welch, General Electric, and the Pursuit of Profit Thomas F. O’Boyle
Available in:
Hardcover Random House (Alfred A.Knopf), 1998 List Price $29.95
Paperback Vintage Books, 1999 List Price: $16.00
Audio Cassette (abridged edition) Dove Entertainment Inc., 1998 List Price: $25.00

Given the enormous and seemingly never ending profit records racked up year after year by GE, it should come as no surprise that a spate of books has appeared in recent years filled with praise for the company and its dynamic CEO, Jack Welch. One author, Robert Slater, has churned out no fewer than three such volumes, while another, Helen Lowe, produced a book consisting of little more than Welch quotations, presented with an almost Biblical reverence. Moreover GE and Welch regularly top various "most admired" lists in a range of business publications.

Now comes Pittsburgh Post-Gazette business editor Thomas O’Boyle, formerly of the Wall Street Journal, with a meticulously researched book which punctures Welch’s and GE’s bubble for the general reader, and which presents a picture of the company that GE workers will clearly recognize.

OF SCANDALS AND RECKLESSNESS

O’Boyle recounts the numerous scandals that have marked Welch’s tenure, from the repeated instances of defrauding the Pentagon to the fiasco at the Wall Street firm of Kidder, Peabody, one of Welch’s acquisitions, in which securities trader Joseph Jett generated hundreds of millions in phantom profits. The author also provides a detailed account of the government’s case against GE for its alleged industrial diamond price fixing scheme with the South African based cartel De Beers, one rap GE managed to beat.

Nor does O’Boyle ignore GE’s long history of environmental recklessness, which has continued under Welch. Relying on extensive interviews and legal records, the author documents company failures to prevent exposure of workers and surrounding communities to GE generated radioactivity and nuclear waste, and its subsequent attempts to cover it up.

Similarly, he tells the story well known to UE Local 332 members in Ft. Edward, NY of GE’s pollution of the Hudson River with years of PCB dumping, and how it has managed since that time to resist paying for dredging or any comprehensive clean up.

But At Any Cost is more than merely a catalog of GE wrongdoings.

‘THE TYRANNY OF NUMBERS’

The author takes a hard look at Welch’s take no prisoners management style which has resulted in what O’Boyle calls "the tyranny of numbers".

This, he contends, has not only resulted in ethical lapses on the part of hard-pressed managers eager to please their demanding CEO, but also has caused production snafus, and an abandonment by Welch’s GE of any semblance of loyalty to employees or the community in favor of an almost maniacal pursuit of ever higher profits.

For example, GE’s attempt to equip its refrigerators with rotary compressors was turned into a major disaster largely because of the pressure exerted by Welch to rush the product to market. As a result, it was not adequately tested and danger signs were ignored.

In a similar vein, O’Boyle argues convincingly that Joe Jett and his ilk are not merely rogue employees as GE would have it, but symptomatic of a lack of institutional control in a system where big numbers determine the stars, and those who fail to measure up don’t survive very long. Those caught up in scandals were employees who "provided the kind of income stream that had made superiors very reluctant to ask too many questions." Those who did ask "were either shunted aside or dismissed."

And whereas Welch’s predecessor, Reg Jones, had placed high emphasis on the three elements of loyalty, moral integrity, and innovation in describing the "spirit" of General Electric, O’Boyle contends that all three have suffered greatly under Welch. Indeed Welch instituted something of a campaign against the very word "loyalty", actually forbidding its use among his headquarters staff. "To get results, Welch and his lieutenants had created a climate of purposeful insecurity, a turbocharged environment in which people were never quite certain they would have a job tomorrow." There can be no argument with this statement, either from the survivors or from Welch’s quarter million or so casualties.

Somewhat more surprisingly, O’Boyle contends that technological innovation, long a hallmark of the company founded by Thomas Edison, has also waned under Welch. GE has lost its preeminent position in new patents issued even as it has cut R&D spending. Welch is not anti-research, but like everything else, he demands that it pay off quickly. Growth has largely been fueled not by new product development, but by acquisitions and GE’s crown jewel, financial services.

This criticism is perhaps overstated, since GE remains a technological heavyweight, but there can be no doubt that the company has moved away from manufacturing. For all its rhetoric about "competitiveness", GE largely avoids competitive markets it cannot effectively control. And as O’Boyle correctly notes, GE’s remaining manufacturing is largely a matter of the assembly of parts purchased from contractors. One wishes the book would have discussed Welch’s passion for "sourcing".

To his credit, and unlike most business writers, O’Boyle is not fooled by GE’s rhetoric of employee "empowerment", supposedly a foundation of its WorkOut program. He has simply studied the company’s deeds too closely. And while the book contains nothing about life on the GE factory floor, the author recognizes that GE’s hard driving ways have taken their toll on the production workforce.

DISAPPOINTING OMISSION

One of the book’s disappointments is the complete absence of any discussion of GE’s labor policies or its attitude towards unions. Despite conducting over 300 interviews and being based in Pittsburgh, O’Boyle never bothered calling the UE national office, our union’s 60 year bargaining history with GE notwithstanding. There is accordingly no discussion of GE’s rabid anti-unionism and frequent lawbreaking when confronted with campaigns at its unorganized plants.

Similarly, GE’s extensive Maquiladora zone operations are barely mentioned, a subject that is ripe with illustrations of what happens when GE is free to act without the restraint of unions, protective laws or regulations, or democratic institutions.

O’Boyle clearly is troubled about the widespread damage done to communities and to countless individuals by big corporations. He recognizes that GE has set the tone over the past twenty years for much of American business with its relentless downsizing, productivity drives, and cost reductions. For him, GE has lost its soul under Welch and has become totally preoccupied with the needs of stockholders to the virtual exclusion of all other interests.

While asserting that profits are important and conceding that Jack Welch is unmatched in accumulating them, the author asks some questions that few business writers ever do. To what ends are we proceeding with this unquenchable thirst for ever larger profits? Is the country on the brink of moral decay and social unraveling when simple avarice is the guiding ideology of corporate America? O’Boyle indicts Welch, so often lauded as a visionary, as having no real vision beyond finding ways to squeeze ever more juice out of the profit lemon. He asserts that history "will judge him harshly for that".

O’Boyle’s verdict may be true, but he has no answers to the questions he poses. He seems to long for the days of a more humane capitalism, presumably as existed before the microelectronic revolution and the age of globalization and free trade agreements. Beyond merely hoping corporations treat people better, he offers no political vision of what is necessary to confront, much less to control, GE and global capital.

While the author is familiar with GE’s checkered history, he overrates what it was like to work for GE in the pre-Welch days. His statement for example that three years before Welch took over in 1981 that "GE was a place of cradle-to-grave employment", will draw howls from the many who know better. GE indeed used to promote a "best balanced interests" theory, often trotted out during contract negotiations, which supposedly reflected concerns for employees as well as customers and stockholders. It was just as fraudulent then as Welch’s empowerment talk is now.

Neutron Jack may be a particularly ruthless boss who has undoubtedly put his stamp on GE, but in many ways he represents a continuation of, and not a break with, the GE of the postwar period.

These reservations aside, O’Boyle has written a splendid account of Jack Welch’s General Electric which is not only a welcome relief from the hero worshipping so common in reporting about GE these days, but which is indispensable to anyone with an interest in this immensely powerful corporation. GE workers especially will not want to miss this book.

(In shorter form, this book review originally appeared in the March 1999 issue of the UE News and UE News online)