Lights Out: Pride, Delusion, and the Fall of General Electric

by Thomas Gryta

The other major oil industry suppliers were similarly weary, trying to shore up earnings by slashing jobs, trimming project costs, and squeezing their own customers and suppliers wherever they could. (The wildcatters had it worse: many of the mom-and-pop operators of the American oil patch started to file for bankruptcy.) One year later, GE would merge its oil and gas unit into the oil-field giant Baker Hughes, keeping for itself a more than 50 percent stake in the company and spinning out a new public company to be run by Simonelli, under GE’s control. The transaction eased GE’s exposure to the ongoing oil rout and gave the new company, dubbed “Baker Hughes, a GE company,” vast new areas of redundant employees and operations to eliminate. With Baker Hughes, GE changed its tone a bit. The deal was transformational, but in which intended direction wasn’t made clear. GE execs like Bornstein would proclaim that the deal gave them “optionality,” but the reality was that investors were left in the dark on the strategy: Was GE doubling down on oil? Or was it preparing to exit the industry? The idea of holding such a long-term option was nice, but the game pieces in the positioning were people, and those who didn’t leave their job had no idea where the future of the company might be. The new arrangement didn’t spare Lufkin. The historic foundry was closed. The city’s annual financial report now just shows a blank line when listing the company’s employment tally, evidence of the m...