When General Electric CEO John Flannery unveiled plans last fall to slim down the giant conglomerate, his vision seemed a bit fuzzy to many at the time.
That picture became much clearer today, as GE unveiled an $11 billion deal to merge its transportation business with train equipment maker Wabtec. GE gets $2.9 billion in cash; Wabtec becomes a big global player.
Flannery previously pledged $20 billion-plus in divestitures, to focus on GE’s power, health care, and aviation businesses -- and to shore up that flagging stock price. GE is now well on its way, at least with the divesting. Previously announced sales of a health care IT group and an electrification business total nearly $3.7 billion. Flannery is more than two-thirds of the way toward his goal.
Flannery confirmed transportation was on the block in November, and the Wabtec rumors first surfaced a few weeks ago. GE’s Chicago-based transportation group, with its $4 billion in annual revenue and 9,000 employees, will likely be the largest unit to leave. Flannery is expected to offer more details about his turnaround efforts at an investor conference on Wednesday.
What about Boston? The corporate office in Fort Point is lean, with about 250 people. Shedding transportation should have a minimal impact, if any. All eyes are on GE’s ambitious plan to renovate two older brick buildings there and build a 12-story tower next door. Flannery delayed the HQ tower as a cost-saving move, but company officials say they remain committed.
By the way, the latest Fortune 500 rankings came out today. GE dropped five spots to 18th -- a new low, apparently. The rankings are based on revenue. So GE will likely fall again, following these divestitures. But Flannery’s moves show he is more worried about where GE ranks with its shareholders.