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BOOK REVIEW: General Electric was the nation's largest company, until it failed. 'Power Failure' chronicles its meteoric rise and fall


In October, General Electric announced it will be abandoning its 100,000-square-foot property along Boston’s seaport in favor of smaller office space in the city. Certainly the pandemic had something to do with the decision as employees choosing to work from home have prompted businesses everywhere to cut back on desks. But this decision has much more to do with the decline of what was once the world’s largest and most respected conglomerate.

As such, the release of “Power Failure: The Rise And Fall Of An American Icon,” a hefty, comprehensive and eminently readable history of General Electric, could not be more timely. Author William D. Cohan, an accomplished financial journalist, chronicles GE’s rise from the era of Thomas Edison — and Cohan argues, his unheralded business partner Charles Coffin — up to the downsizing of the dream of a state-of-the-art corporate headquarters in Boston. And for Berkshire readers, there is plenty of juicy material on Pittsfield’s role in GE history, centered around the legendary — for good and ill — corporate magnate Jack Welch.

The “rise” of GE is encompassed by the rise to CEO of Welch, who took the conglomerate, and its investors, to stratospheric heights. Brilliant and volatile, a bully who nonetheless had the charisma to attract fierce loyalty, Welch pushed the industrial giant to success in not only its specialty but in other fields. The purchase of RCA, for example, led to ownership of NBC. A deal with a French medical equipment company helped turn GE into a colossus in that industry.

Welch’s rise, which provided him with tremendous wealth and media celebrity, began in the late 1960s when he became head of GE Plastics in Pittsfield. Dan Fox, “the father of Lexan,” made GE a major player in the plastics industry and Welch assured it reached global status.

Welch had fun along the way. Cohan recounts how Welch and his “Jack Pack” cavorted after hours, often at the Five Chairs in Pittsfield, with Welch in the role of Frank Sinatra. Welch had a growing family and a real affection for the city.

That affection didn’t protect Pittsfield from Welch’s prodigious job-cutting as GE’s head honcho in Fairfield, Conn., a purging that prompted one wag to dub Welch “Neutron Jack” because he eliminated people but left buildings standing. Some of those buildings still stand in Pittsfield, silent sentinels to the days when the Jack Pack roamed the city at night and the local economy flourished.

The fall of GE began officially under the regime of Welch’s handpicked successor Jeffrey Immelt, although as Cohan chronicles, Welch left behind a few time bombs. Immelt moved into the corner office on Sept. 10, 2001, what Immelt ruefully described as his “one good day” atop GE.

The terrorist attacks of 9/11 shook the nation and its economy to the roots. Precipitous drops on Wall Street hit GE along with every company, but GE’s heavy investments in the reinsurance and airline industries posed an existential threat to the conglomerate’s future.

Under Welch, GE’s foray into the financial world led to the creation of GE Capital, which became the equivalent of a private mint. GE evolved into a bank with an industry attached, in the eyes of critics, and when the economic crisis of 2008-2009 hit, GE Capital threatened to drag all of GE into bankruptcy.

To his critics, Immelt, who also ran GE Plastics in Pittsfield, though his tenure was less colorful than Welch’s, was a marketing guy who never learned the intricacies of the industry and didn’t listen to those who did. He also remained committed to maintaining stock dividends that were unrealistic. Unlike Welch he didn’t get to leave of his own volition, but Cohan creates an image of GE as a corporation in a plastic bubble under Welch that burst on Immelt’s watch.

From a local perspective, it should be noted that the author gives Pittsfield native Larry Bossidy his due. Bossidy became Welch’s right hand man, his sober yin to Welch’s explosive yang, and an adviser who could speak truth to power — and on at least one occasion chronicled here did so with some choice Anglo-Saxonisms. Bossidy left GE in 1991 to forge his own career as a top executive at AlliedSignal and Honeywell.

Cohan has a gift for explaining complex financial matters in understandable terms and he possesses a light, breezy style of writing. He had access to both Welch and Immelt, whom he quotes extensively, as well as dozens of GE upper managers, many of whom fell by the wayside, and perceptive outside observers.

The story of General Electric is, in part, the story of American capitalism writ large. In Cohan’s capable hands it is also the story of people — people both extraordinarily gifted and monumentally flawed. It is the people who keep the 800-plus pages of “Power Failure” turning.

Bill Everhart is The Eagle’s former editorial page editor.

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