US business executive. He started his lifelong career at General Electric (GE) in 1960, climbing the corporate ladder to become, in 1981, the youngest chief executive the company had ever appointed, and only the eighth in its history. Considered one of the 20th century's greatest corporate leaders, he transformed GE from an unwieldy conglomerate into Fortune magazine's ‘world's most admired company’.
With ruthless restructuring and rationalization, Welch used GE's core industrial strengths to create a sophisticated global service provider. Numerous books and articles have been written about GE's management expertise, which has been adopted throughout the USA. Welch retired in the autumn of 2001.
He was born in Salem, Massachusetts, the only son of a train conductor on the Boston & Maine Railroad Company. Having graduated from the University of Massachusetts with a BS in chemical engineering in 1957 and from the University of Illinois with an MS and PhD in the same discipline, he joined GE's plastics division in 1960 to work on developing a heat-resistant plastic. Successfully leading the engineering and marketing teams, he was the youngest divisional head by 1968. In 1972 he was senior vice-president and sector executive of consumer products and services, as well as vice-chair of the GE Credit Corporation. In 1979 he became GE's vice-chair.
On Welch's appointment as CEO, GE was a top-heavy US conglomerate with its business mainly in manufacturing. Determining that GE companies must be ‘number one or number two’ in their market, he sold marginal businesses in 1984 and bought companies where GE would have a competitive advantage, which included Hungarian manufacturer Tungsram, which held 7% of the European lighting market.
He then added new service business to the industrial mix, such as GE's $6.3 billion acquisition of RCA for its subsidiary, NBC television network, in 1986. In 1987 he exchanged RCA's consumer electronics business for the medical equipment business of the French, state-owned Thomson, thereby consolidating GE's position in medical scanning technology. He also bought the investment bank Kidder Peabody in 1986, although he later sold it following a bond trading scandal in 1994. Most notably, he built up GE Capital into a giant consumer credit, financing, and leasing operation, contributing about 40% of group profits.
At the businesses he kept, Welch pushed his executives to become more productive, encouraging ‘speed, simplicity, self-confidence’: inventories were trimmed, bureaucracies and entire layers of management were thinned out. He launched training centres and seminars, as well as ‘workouts’, where employees and their managers would share knowledge and experience to create new ideas, which, if successful, would be transferred around the entire group.
During the 1990s, Welch pushed further into global markets. He bought the aero-engine servicing operation of British Airways (BA) in Wales in 1991 to carry out maintenance work on BA's entire fleet – including those made by rivals such as Rolls-Royce – seeing servicing engines as more of a growth business than making new ones. Welch also positioned GE increasingly as a consultancy operation. Having sold medical imaging equipment to the health-care giant Columbia/HCA Healthcare Corp. in 1995, GE contracted to service all of Columbia's imaging equipment, including that made by GE's rivals.
The management succession of US executive Jeffrey Immelt was deferred in 2000, following GE's successful outbidding of United Technologies to buy another large conglomerate, Honeywell International, which itself had merged with Allied Signal in 1999, in a $43 billion deal.
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