The logo of General Electric Co. is pictured at the Global Operations Center in San Pedro Garza Garcia, neighbouring Monterrey, Mexico, on May 12, 2017.

General Electric’s new CEO inherited a $31 billion problem

$31 billion

General Electric chief John Flannery inherited a troubled balance sheet, including a pension plan deficit of $31 billion—the largest in the S&P 500.

Published   |  Photo by Reuters/Daniel Becerril
The logo of General Electric Co. is pictured at the Global Operations Center in San Pedro Garza Garcia, neighbouring Monterrey, Mexico, on May 12, 2017.
$31 billion

In 2001, when Immelt took over, GE had a pension plan surplus of $14 billion. But the 2000s were tough. Bad deals, an ambitious expansion that went wrong, and the financial crisis left it with a pension plan deficit of about $7 billion in 2008.

The logo of General Electric Co. is pictured at the Global Operations Center in San Pedro Garza Garcia, neighbouring Monterrey, Mexico, on May 12, 2017.
$31 billion

The logo of General Electric Co. is pictured at the Global Operations Center in San Pedro Garza Garcia, neighbouring Monterrey, Mexico, on May 12, 2017.
$31 billion

The problem has only grown since. On top of managing a complex restructuring of the 125-year-old conglomerate, Flannery is responsible for a retirement plan that supports 600,000 workers.

The logo of General Electric Co. is pictured at the Global Operations Center in San Pedro Garza Garcia, neighbouring Monterrey, Mexico, on May 12, 2017.
$31 billion

The company will borrow $6 billion this year so it can make pension payments for the next two years, but that only delays a resolution instead of solving its “ticking time bomb.”

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