When John Flannery took over as CEO of General Electric, he brought a vision of a company that would be simpler and leaner. For years, GE had wowed managers around the globe as a high-performing conglomerate engaged in everything from electricity-generating equipment to entertainment (NBC Universal) to financial services to its iconic lighting division. But as the economy has changed, GE has been unable to sustain solid profits in some of those areas. Flannery determined that GE would focus on its three most profitable lines of business: aviation (making jet engines), power generation, and health care (especially imaging equipment).Flannery's first big moves included spinning off GE's railroad business, one of North America's leading makers of locomotives for freight trains. The business unit, GE Transportation, has been owned by GE since 1907 and became less profitable in recent years. Flannery negotiated a deal with the Wabtec Corporation (formerly Westinghouse Air Brake Technologies), which produces equipment for freight railways and mass-transit operations. The deal combines the two companies into one; roughly 50 percent is owned by Wabtec shareholders, 40 percent by GE shareholders, and 10 percent by GE itself. Wabtec's CEO was selected to run the business, and GE was to receive $2.9 billion in cash when the deal closed.The combined company should be a powerhouse in the transportation business. Based on the merging companies' sizes at the time the deal was announced, it has $8 billion in revenues and about 27,000 employees. Combining the companies allows management to cut costs, perhaps as much as $250 million a year. And it gives GE extra cash at a time when the company has a heavy load of debt.While Flannery and his recent successor, Larry Culp, have been asking themselves which businesses GE should be engaged in, the managers of the former GE Transportation facilities have faced their own set of decisions. GE Transportation not only built a locomotive factory in Lawrence Park, Pennsylvania, a century ago; it also designed and built the community in which its workers would page 31live. Generations of Lawrence Park residents took jobs in the factory and earned a comfortable living at wages negotiated by their union. GE was a key part of the community, and being a GE employee was a significant part of many community members' identities.For managers, being part of GE's high-performance culture meant they had to keep looking for ways to be more efficient. One way to save money was to have more of the work done by employees who would work for a lower wage. Like many other manufacturers in the Northeast and Midwest, GE Transportation opened a facility in the southern United States. The company chose Fort Worth, Texas, and built its largest plant there. Employment at the Lawrence Park facility has dwindled from about 5,000 in 2013 (the year the Fort Worth facility opened) to fewer than 2,000 today. That does not mean the factory cut production by the same amount, however. Many of the remaining jobs at Lawrence Park are high-tech positions in advanced manufacturing, which lets companies produce greater output with fewer workers.Meanwhile, at the million-square-foot Fort Worth facility, the nonunion workers are busy assembling locomotives. A high-demand area of business is refurbishing locomotives. A 25-year-old locomotive is considered "middle-aged"?far from ready for the scrap heap if it can be cleaned up and modernized with new parts. When locomotives arrive at the facility, workers remove major components and send them through separate production lines that meet up at the opposite end of the facility to be reassembled into a rejuvenated locomotive. The whole process takes roughly two months. Renovating a locomotive allows its owner not only to extend its life but to make it more efficient. Installing high-tech sensors and software can increase the locomotive's efficiency and power. A train that once required three locomotives might run with two?a considerable savings for the railroad, especially considering that each locomotive's fuel consumption might have fallen by 10%. Demand for this service is so great that the company even works on locomotives outside its factory; it has dispatched workers with supplies to customers' own depots.Some observers expect that the move of production from Pennsylvania to Texas is one step in a process that will lead to building facilities in Mexico or other lower-wage countries. If that happens, it will be a decision made not by GE Transportation, but by the management under Wabtec CEO Raymond Betler.

Questions for Discussion 1. What kinds of decisions and actions were taken by GE and the managers at Lawrence Park and Fort Worth? Categorize these as planning, organizing, leading, and controlling. 2. How have new technologies utilized at the Lawrence Park facility help save local jobs? 3. In your opinion, what responsibilities do GE and Wabtec have toward their employees and the communities in which they operate