Since Thomas Alva Edison invented the light bulb in October 1879, giving rise to the embryo of the emporium, the General Electric (GE) appliance division has been the least significant, in terms of business volume, of all the companies that make up the company. But it’s impossible to find a single home in America without a stove, dishwasher, or blender with the brand’s sinuous logo. Because GE is more than a signature, it is a symbol, like the old ones chevrolets, of the economic development of the US From a 20th century that went down in history due to the strength of its industry and that today, already on track for the 21st, is witnessing the liquidation or recomposition of its remains.

General Electric, with a presence in sectors as diverse as defense, telecommunications, public works, media or health, announced on Tuesday that it will be divided into three large listed divisions, health, renewable and digital, to clean up the business, reduce the debt and boost your stock value. The Stock Exchange greeted the restructuring with rises of 5% and the announcement set a trend: the Japanese Toshiba announced two days later that it will split into three, and this Friday Johnson & Johnson confirmed their divorce.

Founded the conglomerate in 1892 as an industrial research laboratory in New York State – a calling that continues at its research center, GE Global Research, one of the world’s leading-edge – General Electric, based in Boston, has explained that the health care division will be the first to separate in early 2023. From there, GE will merge the renewables and electrical and digital equipment businesses into another company that will become independent in 2024. And that grouping, in turn, will give light to the third company, GE Aviation.

The rebirth or his funeral

For some, it is the swan song of a centennial emporium that in 2011 was the sixth in volume of business in the United States, with interests in the mortgage sector, lines of credit or entertainment television; for many others, the change in the wheel needed to overcome the crisis that had dragged on since the Great Recession of 2008, and which marked the red numbers a decade later, due in part to its ubiquity. In the hands of Larry Culp, the company’s first CEO not out of the quarry, GE reverses the trend toward diversification that characterized the 1980s and 1990s, when the Federal Reserve labeled it as Too big to fail (too big to fail), the concept that describes the risk of disastrous bankruptcy with systemic implications for the economy.

Both the recent loss-stricken past and GE’s immediate future bear the spirit of its managers. Jack Welch, who led the company between 1981 and 2001, was for many the most prominent executive of his era, that of the profit free bar and the wolves of Wall Street. With him, GE grew from an appliance and light bulb company to a service and industrial giant. His ruthless business model, marked by cuts and layoffs, earned him the nickname of Neutron Jack, but it is still studied in the faculties of the branch.

As the Fed had warned, its structure, a money-making machine during times of fat cows, ended up being a drag when competing in a much more dynamic scenario such as that imposed by technology, with the added factor of the systemic crisis 2008. However, and despite going into losses, GE has been one of the 30 reference companies for the calculation of the Dow Jones industrial index.

Income falls by half

The idea of ​​the spin-off was not new, but it must have been an executive outside the company’s traditional culture who was in charge of undertaking it. In the two decades that followed Welch’s reign, his successors, Jeff Immelt and John Flannery, lifted the drag by selling parts of the company to improve its price, but a losing streak in the energy division ended up taking the latter away. Culp, 58, raised the possibility of the split earlier this year, and formal discussions kicked off in the spring. Since his appointment as CEO in 2018, he has gained a reputation as a good manager – thanks to him the energy division of the conglomerate, including the renewables sector, has returned to profit – although he could not avoid two exercises of red numbers and figures dire a year later, in 2020: single 79,000 million dollars (69,000 million euros) of income, far from the 180,000 that it achieved in 2008.

According to sources of the negotiation to which the Reuters agency had access, Culp saw clear from the first moment that the health division was ready to fly alone, while the other two are not yet self-sufficient, hence the restructuring process was extend through 2024. The transformation will cost about $ 2 billion and will need to be approved by US tax and securities regulators.

GE has been much more than an emblem of American industry; his is also a decisive contribution to the progress of humanity that has also been maintained over time. His inventions include, in addition to the famous first incandescent carbon filament bulb (1879), the X-ray machine (1896), the electric fan (1902), the popular toaster (1905), the first jet engine of USA (1941) and the 4D ultrasound system in 2002.