Vijay Vaitheeswaran (The Economist, GE)


Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

Gee he has obviously been in the news over the last couple weeks after rock cutting their dividend and announcing a restructuring plan. And joining us now is Vijay about this warrant from the economist you talk about that plan. And in what John planners trying to do here Vijay thanks for coming on the house. BJ can you lay out the the general tenets of the plan. That was prefer for a proposed by mr. Flannery. Certainly. We all know the trouble that he had a late. If you knew wish bought the jump battery has strategy that best country pillars. One of them has to do with changing the culture and GT which has. Lost its way in the last three years. Second one is ruthless cost cutting efforts. And the third one has to do was really returning to the core of the business process that began under Jeff Immelt and his predecessor but I was not completed. When we talk about returning to the core of the business what are the focus areas that they have now. So GE of course got its start with palace that is and it has been an industrial company and it's part. But over the many years especially under Jack Welch. Lionized former CEO. Eight they would beta became a big financial company and it kind of got it all sorts of businesses. Jeff Immelt after the financial collapse. Lehman Brothers and financial crisis. Began to unwind those financial holdings which at one point he more than half of the company's profitability. But had huge risks it was really recklessly that would accompany and that largely has been unwound its. Good he's actually going forward a business is about aviation that is just doing very well health care of business that is doing well and power which. He's not doing well. When we talk about powers that are we talking wind turbines nuclear reactors all the above in and where the biggest struggles on that side. Such it has its toes in the water and all aspects of a power but really the biggest and has been played technologies are gas turbines. Something like they're in the world power is generated on GE turbines around the world and the well extraordinary. But you think about it installed asset base and and that's fossil fuel based power they do have a nuclear division that nuclear does not have much of a bright future. In terms of the company's says and most analysts but look at the industry say that they also do have a renewable business. Excuse bought field Enron wind business. Many years ago and skilled and apps so that's a nice little earner. But is small compared to the power of the power business. We've talked to hear a lot Vijay about the that the cuts in the potential sales that they're gonna make of some divisions. My question and when that we've talked about on this show is. What's the company's plan to grows then because. They don't seem to have that that your product of that that one growth area they can really boost the name in my just missing something on that side. No you're not missing as something of that at the highest level they are going to be a smaller company. Smaller and also be beautiful. Eat it more profitable right there have been what should matter to. Investors and owners his return. Not top line revenues but typically managers get very excited about growth and cost. But investors believe long term investors in many of us. And G stock. Mutual funds or pension funds. Care about total shareholder return. So is the company it would have produced more sustainable returns. On better at that he was there as well asset base we should all be happy about that. However having said that that the growth that really relies I think honesty could saw and that is digital. And the company believes. In something called the Internet of things. We don't know about this sensors. Ubiquitous Internet connectivity. There idea. Which is sometimes called the industrial Internet. Is that is every bit of equipment and industrial world Patrick for machines. Jet engines all of them are wired up. And in real time as a digital claimed that she he maintains. And through predictive maintenance through. Numerous services that they can offer customers they can create much more value going forward and that's. Future gold mine bitchy he's trying to harvest is made good investments and to get themselves. But the payoff has been slow to come and that that's that estimate of growth story. In trying to get into those areas there's obviously a lot of competition to hire the right talent. How much is GE gonna have to pony up for that that kind of talent because I would imagine a lot of either give kids out of college or people in their twenties and thirties might say. Hey look I can get better offers Amazon or Google and we don't know your company's gonna be going anywhere. I think you're right to which your finger on talent as an important challenge and I don't think it's about elevated that the key. Geez it would appear reasonably competitive salaries. Italics or four engineers there's software. Books that they and other things experts say that it doesn't need. And it's really more about. How cool is to work at going to be able to work on but I gonna ditch them options and a growth company. You know I was pretty engineers to work or school or Tesla what you wanna work PGE and I think there's they have not. Exceeded. Even when they committed tried to have operations in the Silicon Valley to try to tap into that pool of talent but they didn't. Set up at the heart of Silicon Valley is that a ears Silicon Valley. In the uncool area is considered give an example. And that is of course it will from Connecticut is posted to this article it would create. So there are some moves that will help. I think the real problem does not that he will be bankrupted by years as predicted to be here for a long time you is that getting the top tier talent. You really going up against the Amazon and the test and that's that's heartfelt it's. Rather than they don't seem like the kind of company that's going to go out of business but the question is can they Grohl. And continue to provide value for both shareholders and new employees who are looking for the right compensation Vijay we appreciate the time to thank you for joining us. It absolutely that is Vijay about this warrant from the economist talking about GE. And its future is a company and that there's no doubt that it is a company at a crossroads right now are ends. We've we've seen this in a few different cases where. Companies after reinvent themselves sometimes unsuccessfully to take a look at Cisco Systems they spend about fifteen years count about the wilderness trying to find their way and if they they're starting did make some progress there. But it was dead money for effectively fifteen years SE IBM in the same boat. Now company that was able to make the turn successfully. Is Microsoft Microsoft I look at what they've done in the last five years. And again this is a company that kind of the same boat as GE hey we've we've got these legacy platforms and that money. We've been able to turn the corner and we figured it out so the question is is GE giving you the red Microsoft or IBM.