GE Chief Says Supply Chain Is a Daily Challenge
General Electric Co.
Chief Executive Officer
Larry Culp
said that the company’s breakup plans are on track but that it continues to battle supply-chain pressures that threaten to slow deliveries and push up costs.
Early Monday, GE named the board for its healthcare business and said it plans to spin it off as a separate company in the first week of January. Mr. Culp will be nonexecutive chairman of the new board, and GE Healthcare CEO
Peter Arduini
will also be a director. The Boston conglomerate plans to split into three separate public companies over the next two years while it navigates the pandemic’s impact on its aviation business and supply-chain problems.
“Supply chains, broadly defined, are still challenging,” Mr. Culp said in an interview Monday, highlighting challenges at both the aerospace and healthcare divisions. “You might have success here. You might make progress there, but I don’t think we’re anywhere close to declaring victory.”
Mr. Culp said the company is streamlining its manufacturing processes and working with suppliers to help keep down costs.
“We’re continuing to spend a great deal of time, both on supply chain and relatedly inflation,” he said, noting the need to be mindful of the connection between the two. “In talking to other CEOs, it continues to be a daily battle for them as well.”
Mr. Culp is approaching his four-year anniversary of taking over as CEO. Since that time, he has overhauled manufacturing practices, sold off divisions, paid down debt and made GE’s far-flung divisions responsible for covering their own costs. Last November, Mr. Culp announced that GE would break up.
Mr. Culp’s new role at the healthcare business adds to his existing titles, chief executive of the aerospace division and CEO and chairman of GE. He played down the idea that the numerous titles would become a distraction, saying that he has been working in similar roles for years and that healthcare will require less of his time as his role evolves.
“That has allowed and will continue to allow me to spend more time at aerospace, which is what I’ve been doing for the last couple of months here,” he said.
The planned healthcare board includes eight additional members, including three from GE’s current board. The members include Cleveland Clinic CEO
Tomislav Mihaljevic
;
Lloyd W. Howell,
finance chief of
Booz Allen Hamilton Holding Corp.
; and
Anne Madden,
general counsel at
GE hasn’t said what valuation it will seek for GE Healthcare, which has about $18 billion in annual revenue. Overall, GE has a market capitalization of around $80 billion as investors await the breakup. The shares have fallen about 20% so far this year, compared with a 16% drop in the S&P 500 index. GE’s healthcare division plans to hold an investor day in early December.
GE’s power and renewables business will combine and form a separate company in early 2024, while GE Aviation will be the surviving unit. Existing GE shareholders will get new shares in the two companies after they are spun off.
Write to Thomas Gryta at thomas.gryta@wsj.com
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