Exactly one week before the World Trade Centre attacks, I was in New York interviewing Jack Welch, the departing chief executive of General Electric. His office on the 51st floor of 30 Rockefeller Plaza has an amazing view looking south across Manhattan towards Wall Street.
Before flying back, I was given a tour of Continental Airline’s new terminal at Newark Airport. The airline is spending $1bn (Pounds 0.7bn) on a huge expansion programme, with extra gates, a new customs hall and new baggage facilities.
It is – or was – geared towards winning extra passengers on the air routes between the US and Europe.
You have to feel sorry for them. Within days of the US attacks, Continental had announced 12,000 job losses and said it was cutting flights by 20%. Some 75 flights a day have been scrapped at Newark alone.
You also have to feel a little sorry for Welch’s successor, Jeff Immelt.
GE not only makes aircraft engines, notably the GE90 used on Boeing 777s, but is exposed to aircraft leasing, through GE Capital. This brings the prospect of job losses – a scenario with which the company is only too familiar. Welch fired more than 80,000 people in 20 years at the helm, earning him the moniker ‘Neutron Jack’. Like the bomb, he removed the people but left the buildings.
Welch has been lauded as America’s most admired businessman, and he did not get there by being nice to people. He instituted a practice under which section heads were obliged to name – then sack – the weakest 10% of workers in their department. GE managers would do anything to wriggle out of this. One even slipped in the name of a man who had died several weeks previously, hoping no-one would notice.
Cruel as it sounds, it focused minds. GE’s profits went up and up. The irony is Welch’s sackings may appear a drop in the ocean compared to what is happening at airlines like Continental.