Our Opinion: Jack Welch's GE-Pittsfield legacy
To say that Jack Welch's legacy in Pittsfield is a complex one is the hugest of understatements.
The former General Electric CEO, who died Sunday at the age of 84, began his GE career in Pittsfield, built GE into a global economic powerhouse that was reflected in the thriving economy in Pittsfield, and then began the city's economic slide in 1986 by announcing the closure of the power transformer division that was the heart of GE's presence in the city. Part of his tenure encompassed the years when GE polluted the Housatonic River and properties in Pittsfield with PCBs from that division, which he headed for a time, an issue that is as alive today as the headlines in last week's Eagle.
During Mr. Welch's tenure, GE's market value grew from $12 billion to $410 billion, making it the nation's most valuable public company, to the benefit of stockholders and to retirees in Pittsfield. GE trades at a fraction of that today, which some analysts attribute to the mistakes of those who succeeded Mr. Welch when he retired in 2001 after 20 years at the helm, while others assert that Mr. Welch set the stage for that collapse by branching out GE into the financing business before the economic collapse of 2008. His overall GE legacy is complex as well.
Fresh out of college, Mr. Welch went to work for Pittsfield's Plastics Division in 1960 as an engineer. As Mr. Welch rose through the corporate ranks. GE's presence in Pittsfield grew as well. The company provided good-paying jobs, funded local charities, sponsored youth sports and was a presence everywhere in the city. When he became CEO in 1981, Pittsfield was confident that with a Pittsfield alum at the helm the good times would continue to roll.
But in truth, Mr. Welch was on his way to earning his nickname of "Neutron Jack," the man who destroyed thousands of jobs while leaving buildings standing. In 1986 he stunned the city and county by announcing the closure of the power transformer division, a division he had run for 18 years. In a 2011 interview with The Eagle's Tony Dobrowolski, Mr. Welch said the division had become unprofitable because of foreign competition, which was disputed by GE's unions, and should have been closed five years earlier. At its height, GE employed 13,000 people in Pittsfield, but the precipitous decline had begun. The buildings would for the most part remain, many of them empty shells.
Pittsfield had plenty of company, however, perhaps most notably nearby Schenectady, N.Y. "GE towns" all across the country were devastated by layoffs in the thousands, while GE's stock price climbed in proportion. In Pittsfield, as the jobs left and the economy unraveled, it was painful to watch Mr. Welch emerge as the model for the new breed of corporate chieftain — ruthless, answerable first and foremost to stockholders, demanding increasingly large profit margins, collector of a mammoth salary ($40 million annually in 1997), a self-promoter eager to sell the virtues of "downsizing," a relatively new term at the time.
In 2007, GE's Plastics Division was sold to SABIC, ending the GE era in Pittsfield. All that was left was the PCB pollution in the Housatonic River below Pittsfield, where the river and a number of properties had been cleaned as a result of the Consent Decree of 1999. In that 2011 Eagle interview, Mr. Welch dismissed PCBs as a "political issue," asserting that a study found there were no cancer deaths or serious side effects among GE workers 30 years after they were first exposed to the chemical. PCBs are regarded as a possible carcinogen in humans, with the National Toxicology Program having concluded that PCBs are reasonably likely to cause cancer in humans. Earlier this month, GE and the EPA reached a mediated settlement to clean the river.
It took too many years for Pittsfield to get over its jilting by Mr. Welch but it appears to have done so. It took too many years to reach an agreement on a Rest of River cleanup but one has been reached. The GE era in Pittsfield is fading into history, leaving behind memories both fond and disheartening, both the products to a large extent of a man, Jack Welch, whose legacy will continue to be debated.
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