UE News Book Review:
At Any Cost: Jack Welch,
General Electric, and the
Pursuit of Profit
Thomas F. O’Boyle
(Alfred A. Knopf, 1998) $29.95 |
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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. At
Any Cost: Jack Welch, General Electric, and the Pursuit of Profit presents a picture
of the company that GE workers will clearly recognize.
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, N.Y. 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.
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.
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."
NO ANSWERS
O’Boyle’s verdict may be true, but he has no answers to the
questions he poses. 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.
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
worshiping 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.
— Steve Tormey
(Tormey is an International Representative
who serves as secretary of the UE-GE Conference Board.
