Management: Electric’s New General

When Fred J. Borch was named executive vice president of General Electric 15 months ago, the implication was as blaring as the horn on a G.E. diesel locomotive (TIME, Aug. 10, 1962). The post has existed only off and on in G.E.’s history, and is usually reactivated to accommodate an heir apparent. By picking Vice President Borch for it, the board cleared the way for the retirement of Ralph Cordiner, chairman and longtime chief executive. Cordiner has wanted to retire to his 1,800-acre West Florida cattle and citrus ranch, but postponed his departure long enough to untangle the lengthy list of suits arising from 1960’s price-fixing decree against G.E. and 28 competitors. Last week Cordiner, 63, announced that he will step down in December. President Gerald Phillippe, 54, will move up to chairman, and Borch, at 53, will become the president and chief executive of the nation’s fourth largest manufacturer.

No Room for Stumbles. Brooklyn-born Fred Borch takes over a giant (200,000 products, 211 plants) in remarkably good shape. The major credit goes to Ralph Cordiner, who succeeded Charles E. (“Electric Charlie”) Wilson as chief executive in 1950 and promptly ordered the most drastic reorganization in G.E.’s 71-year history. Cordiner did not radically change the product mix, which is spread almost equally among heavy electrical equipment, electronics, consumer goods and defense orders (G.E. is the fifth biggest defense contractor). But he decentralized operations and management, making each of 112 department managers a minor president with responsibility for his own budget, pricing and policies. The managers answered to a lean headquarters staff in Manhattan, which was left free for more long-range planning. Cordiner ruthlessly removed managers who stumbled (“It was not the best of times around G.E. at first,” recalls one G.E. executive), and decentralization was to blame for much of the company’s price-fixing mess. But it also streamlined G.E., spurred on department managers and sent business soaring. From sales of $2.3 billion and profits of $138 million in 1951, G.E. shot up to 1962 sales of $4.8 billion and earnings of $265.8 million. The figures for 1963’s first nine months have set a record.

Scientific Sales. Despite this fine position, Fred Borch will still have some problems. Two large and significant departments—atomic power and the new line of lower-priced digital computers —are both still in the red. And with world competition rising fast, the world’s largest electrical equipment maker has some overcapacity. Taking up that slack will be the job of the marketing experts, who under the Cordiner revision won commanding power at G.E. The company’s $300 million annual expenditure on research is the largest of any U.S. corporation, but it is G.E.’s marketing men rather than its researchers who have the final say on how products will be designed, produced and sold.

This arrangement is not apt to change under Borch, who blossomed as a salesman after he graduated in 1931 from Cleveland’s Western Reserve University and joined G.E.’s nearby Nela Park lamp division. Put in charge four years ago of a consumer-goods line that ranged from alarm clocks to industrial air conditioners, Borch introduced “scientific salesmanship,” using computers and detailed consumer research to do the job. The new president is also good at selling himself; he is an informal man who is well liked by his colleagues and respected for his ability to make quick and crisp decisions under pressure. Instead of getting angry or curt when a situation becomes tense, say his colleagues, he is more apt to burst out laughing.