Today we released our 2018 Annual Report. Below is an excerpt from my letter to shareholders. I urge you to read it.
Dear fellow shareholder,
This is my first letter as Chairman and CEO of our company.
I want this to be a document you can use as a reference for how we plan to run GE for the long term. As the saying goes, this is a game of inches every day, not feet or miles, and I want us all to keep score together. My goals are aligned with yours.
Like so many of you, I have been a lifelong student of GE. My earliest mentors cut their teeth at this company, and much of how I have operated and approached leadership and teamwork throughout my career is rooted in GE’s own storied management philosophy.
Coming into GE with this foundation from the outside has its advantages. Someone with a fresh set of eyes can ask new questions and look at challenges in a different way. We face a number of hurdles, but the entire team at GE is focused on tackling our issues head on and making progress across multiple metrics. In this letter, I’ll walk you through the actions we are taking to improve our financial position and strengthen our businesses.
It is clear we have work to do. In 2018, weak execution and markets in Power were partially offset by strength in Aviation and Healthcare. We took several charges related to Power and finalized a $15 billion capital shortfall with our regulators related to our run-off insurance business. We made major changes to GE’s strategy, portfolio, leadership, and board—my own appointment included.
We are doing everything in our power to return GE to a position of strength, and we will need your support and patience to make sure we do so. I am confident that we can for three reasons: our team, our technology, and our global network.
First and most importantly is our team. One of the first things I did as CEO was to begin to meet and talk with GE people. What I found were talented colleagues from all over the world with grit, resolve, and intelligence. They do not need any convincing that how we operate must change. They are up for the fight and ready to win—because GE matters.
GE matters because our technology helps bring progress and possibility to every corner of the planet—safely delivering people where they need to go; powering homes, schools, hospitals, and businesses; and offering more precise diagnostics and care when patients need it most. Our equipment and solutions are deployed in two-thirds of the world’s commercial aircraft departures,[i] more than 2,200 gigawatts of the world’s power generation capacity, and more than four million healthcare installations. This vast and valuable installed base keeps us intimately involved with and often responsible for the daily operations of our customers around the world, constantly helping us to better understand and serve their needs.
This purpose has driven more than 125 years of GE innovation, and it is as strong as at any time in our history. That’s what drives the renewal of our aircraft engine portfolio—from the T901 turboshaft for the U.S. Army to the GE9X, the world’s largest jet engine. It is why Renewable Energy is building the Haliade-X, the world’s largest and most powerful wind turbine, which has blades longer than a football field. It is why our engineers were the first to leverage new gas turbine technology, setting world records for combined-cycle efficiency with our HA turbines in both 2016 and 2018.[ii] And it is why Healthcare helps doctors develop more precise diagnostics and treatment that can give hope to patients whose diagnoses were previously considered hopeless.
Many companies have strong talent and technology. But few also operate with the depth and strength of GE’s global network. We’ve built a local presence, a strong brand, and deep customer relationships in more than 180 countries, and have invested in emerging markets in Africa and Asia for more than one hundred years. We are proud to serve as true partners in their growth and development—offering resources and experience, investing in local talent and supply chains, and bringing other partners along with us. These networks will continue to be our unique competitive advantage as we pursue profitable, cash-generating growth for years to come.
With these strengths as our foundation, we have a straightforward plan to address our issues and define GE’s path forward, focused on two priorities.