When General Electric announced its massive restructuring plan last month, unloading most of the GE Capital assets, Reuters described it as “exorcising the financial demons of Jack Welch.”
That's because Welch was responsible for building GE Capital, the giant finance unit that has become a huge risk and burden to the company in recent years. In some ways, it marked the end of one of the legacies Welch had built during his 20-year run as CEO.
Yet Welch isn't taking it personally. In fact, when we spoke with Welch at an event this week, the former CEO seemed to endorse the company's move, calling it a welcome change that GE needed after all.
“GE’s the only company that was on the original Dow Jones list and still exists there, and it did it because it changes all the time with the times,” Welch told Business Insider during an event to promote his new book, "The Real-Life MBA."
“I don’t know the details - I’ve never been back to GE in 15 years - but I do think change is good. GE’s been able to do that for 120 years,” he added.
He noted that other parts of his legacy remain intact and integral to the company. "I built medical systems, the management system, transportation; Those were all my businesses."
Welch also pointed out the same thing happened when he was at GE for two decades. As CEO, Welch facilitated a massive reorganization plan, spinning off roughly 200 businesses and making 370 acquisitions, while drastically cutting down the size of its workforce. In fact, he was called “Neutron Jack” for laying off so many people while leaving the office buildings in place.
But Welch also stressed it’s the macroeconomic conditions that made GE Capital a less attractive business. Indeed, after the 2008 financial crisis, the government has imposed heavier regulations on big financial institutions, such as GE Capital, which is the country’s seventh largest bank, making it harder to generate huge profits as it did in the past. It made GE stock less attractive and its share price has been stuck below $30 for years.
“The rules have changed the playing field,” Welch said.
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SEE ALSO: GE is spinning out most of its $500 billion GE Capital business, selling its $26.5 billion real-estate portfolio, and planning a $50 billion buyback