Philippa Kaur

THE MOON will not start to move between Earth and the sun until the morning of April 8th. But the business impact of this month’s total solar eclipse, which starts over the Pacific Ocean, cuts a path across North America and ends in the Atlantic, is already plain to see. According to Jamie Lane of AirDNA, a travel-data firm, on a typical Sunday night in April around 30% of homes listed for short-term rental on Airbnb or Vrbo in areas in or around the eclipse’s path are occupied. A remarkable 92% of listings within the zone of totality have been booked for April 7th. Demand for homes just a few towns outside this roughly 180km-wide strip has barely changed.The eclipse will be visible from a handful of big or biggish cities, including Dallas, Indianapolis, Cleveland, Buffalo and Montreal. CoStar, a hotel-data provider, reckons that occupancy rates in those places are up anywhere from 12 percentage points (in Montreal) to 67 (in Indianapolis). The remaining rooms appear to be available only at elevated prices. The New York Times reports that nearly half of Super 8 motels in the eclipse’s path with rooms still available are charging at least twice the standard rate.Yet this path mostly covers areas with relatively scant lodging inventory. Of the 92,000 American short-term listings in this zone—just over 5% of the 1.6m in the United States as a whole—85,000 have been reserved for April 7th, compared with just 20,000 for the following Sunday. In theory, owners of short-term rental homes should have been able to jack up prices just like hoteliers, particularly in places with few hotel rooms.However, few Airbnb hosts run their properties with a hotel manager’s business acumen. AirDNA’s numbers show that in cities like Dallas and Niagara Falls, the majority of reservations for April 6th, 7th and 8th were made more than two months ago—far earlier than is typical. Savvy guests pounced on the standard prices on offer before hosts realised that they could raise them and still secure bookings. The average booking on April 7th went for $269, only slightly above the $245 level for April 14th. Combining the 65,000 additional bookings with a 10% increase in the nightly rate suggests that Airbnb and Vrbo hosts will receive a total revenue bump of merely $18m. Even counting the days before and after the peak of demand, when occupancy rates also exceed 80%, only brings the cumulative additional turnover to a total of $44m.The American hosts—and the digital platforms that live off commissions on such rentals—missed a trick, in other words. Unfortunately for both groups, they will not have another chance to learn from their mistake for a while. Alaskans have to wait until 2033 until the next total eclipse, North Dakotans and Montanans until 2044, and Floridians, tourist-friendlier providers of accommodation, until 2045. ■ More

Rule 1. The fire drill must never feel useful. It may be a proven way to help save people’s lives, to say nothing of being a legal requirement in many workplaces. But it is important that people experience the exercise only as an inconvenience. The drill should take place when people are up against a deadline. It must not be timed to coincide with a long meeting, when it might come as a bit of a relief. Ideally, it should be pouring with rain. The drill can be counted a success only if enough people are rolling their eyes and muttering to themselves. (The sixth rule is essential to achieving this outcome, too.)Rule 2. Remember that the drill is not really a drill but an exercise in begrudging consensus. When the alarm sounds, people must never just get up and leave. They must first satisfy themselves that this is not a mistake. Someone might have pressed the wrong button; that voice might yet drone “This is a test” and for once people will feel grateful.They must then see other employees getting ready to leave. This stage involves people bobbing up and down at their desks like demented meerkats to see what their colleagues are doing. When it is clear that this is indeed a drill, people must then spend inordinate amounts of time deciding what things to take with them. What’s the weather like? Should they take the laptop? Where did they put their reusable coffee flask? Should they pack a suitcase? The one thing they must not have as they leave is any sense of urgency.Rule 3. This stage of the drill is when the fire wardens must show themselves. Only the wardens can accelerate the speed of departure from the building. This secretive group is the Opus Dei of the office but with a bit less of the fervour or sense of menace. The fire wardens have often been in the role for years; no one knows how they got the job or how to apply. They hide in plain sight: there may well be sepia photos of their younger selves on the office wall, next to an even more obscure sect known only as the “first-aiders”. The wardens reveal themselves during a drill by putting on high-visibility jackets, which instantly confer on them a mysterious authority. The cabal is never seen together at other times.Rule 4. The fire drill will produce a sense of belonging. That is because a drill will suddenly expose you to everyone who works in your building. In the normal course of events, you might briefly share a lift with people from other companies or other departments. You might glimpse their offices as the doors open and close and think how soulless they look. (They will think the same of yours.) But you never realise how outnumbered you are.In a drill, however, strangers surround you. Stairwells fill with people, most of them also weighed down by coats, laptops and reusable coffee flasks. They spiral down below you on the way out and form long queues by the lifts on the way back. You will suddenly feel grateful for the comfort of any recognisable face. You spot someone from legal you think may be called Keith and say hello. You have never given him any thought before; in this moment of grave non-peril he is like family.Rule 5. The assembly area is not so much a designated spot as a place of people’s choosing within a ten-minute walk of your building. Your employer might have specified a place for employees to gather. They may have given it militaristic names like the “primary muster point” or the “tertiary evacuation zone”. No one else will have the faintest idea where it is. A clump of people will mill about as close to the site of the notional blaze as possible. Another group will scatter in various directions in search of a coffee or an early lunch. If they walk purposefully enough, other people will assume they know where the assembly area is and follow them. As a result most of the office may accidentally end up at Starbucks.Rule 6. Confusingly also known as the first and second rules of fire drill, you must never talk about fire drill. At some point word will spread that the drill is over and people will start to drift back to the office. Once they have returned to their desks, everyone must act as though the whole thing never happened. There must never be any reference to how it went or whether any safety lessons were learned. The fire wardens must fold away their high-viz jackets and settle back into the shadows. The work you were doing must simply be picked up where it was left. You will not speak to Keith from legal again. But you do know not to use the lifts if there is a real emergency.■Read more from Bartleby, our columnist on management and work:The pros and cons of corporate uniforms (Mar 27th)The secret to career success may well be off to the side (Mar 21st)Every location has got worse for getting actual work done (Mar 13th)Also: How the Bartleby column got its name More

“TEXAS IS AN El Dorado for us, an energy El Dorado,” declared Patrick Pouyanné, boss of TotalEnergies, last month at CERAWeek, the energy industry’s annual shindig in Houston. He unveiled an expansion of the French supermajor’s shale holdings in the south of the state, a deal intended to bolster its position as the leading exporter of American liquefied natural gas. It had earlier bought three Texan gas-fired power plants and opened a new electricity-trading desk in Houston. Meanwhile in Brazoria, a windswept county an hour’s drive from the city, it has built a solar park capable of producing 380 megawatts (MW) of clean power, and of stashing some of the resulting joules in a bank of lithium-ion batteries made by Saft, its energy-storage arm. Hundreds of sheep and the odd gazelle graze among 700,000 photovoltaic panels on its 2,300 acres (930 hectares), with not a nodding donkey in sight. “You love energy here in all forms, from gas to renewables,” Mr Pouyanné told the oilmen at the Houston gabfest.This ecumenical strategy is TotalEnergies’ attempt to bridge its industry’s transatlantic divide when it comes to the energy transition. The French firm’s big European rivals, BP and Shell, invested heavily in “electrons” businesses like wind and solar energy—until weak returns and sagging share prices forced them into embarrassing U-turns. Its American counterparts, ExxonMobil and Chevron, have instead doubled down on oil and gas, while backing “clean-molecule” businesses like hydrogen and carbon capture—and have been rewarded with higher valuations.Chart: The EconomistMr Pouyanné thinks he can straddle both worlds. His firm will continue to invest in “System A”, as he calls the oil and gas that the world still needs. Examples include its recent hydrocarbon projects in Brazil, Suriname, Namibia and the United Arab Emirates. Here Mr Pouyanné’s imperatives are reducing the amount of carbon released in extracting the crude and, critically, slashing production costs, down to “less than $20 a barrel”, he says. If barrels keep trading for around $90, this should spin out plenty of cash to invest in “System B”, the low-carbon business that needs to grow fast if global climate goals are to be met. TotalEnergies has or is building some 5,000MW of clean-power capacity in Texas alone, making it one of America’s biggest backers of such ventures. It plans to devote 30% of its capital spending, or around $5bn a year globally, to low-carbon electricity, twice as much as a typical major. By 2030 it wants to produce over 100 terawatt-hours annually, enough to light up Arizona. Perhaps a quarter of those terawatt-hours would be generated in America.What makes TotalEnergies’ green plans distinctive is that it has found a way to make good money from them. Last year its return on capital was nearly 20%, higher than all its big rivals (see chart 1). As a result, since 2019 its shareholders have enjoyed a total stockmarket return, including dividends, of nearly 80%, roughly in line with Chevron’s and around twice those of BP and Shell (see chart 2).Chart: The EconomistOne big reason renewable energy suffers in the marketplace is intermittency. In time lots more grid-scale batteries like those installed in Brazoria will cleanly complement its wind and solar. Until then TotalEnergies will use gas turbines as “flexible” backup to manage windless days and sunless nights. A big chunk of the profits from its low-carbon-electricity business last year came courtesy of those gassy “flexible-generation” assets.The dual strategy is a byproduct of TotalEnergies’ history. CFP, in its original French acronym, was founded 100 years ago to ensure France’s energy independence. Initially that involved drilling for hydrocarbons in Iraq. This profitable business ended when the Iraqi oil industry was nationalised in 1972. In 2021 the company returned to Iraq in a spectacular way by securing the lead role in a $27bn energy project. Mr Pouyanné thinks it edged out competitors because it offered financial and technical assistance to help Iraq generate electricity using gas that would otherwise be flared, as well as building 1,000MW of solar power. A similar approach has found favour in Libya, Mozambique and other countries with plentiful hydrocarbons and pitiful power sectors. Now, amid the energy transition, it is gaining ground even in places like America.Some climate campaigners question this strategy. They see gas, which burns more cleanly than oil or coal, not as a bridge to a greener future but a fossil cul-de-sac. TotalEnergies’ capital-spending plans suggest that view is too cynical. Of its $5bn in annual investments in low-carbon energy, 93% is going to renewables and just 7% to gas. By 2028 flexible generation’s share of profits is expected to fall to a quarter, as a surging System B begins to match, and then surpass, a shrinking System A. By 2050 only 25% of TotalEnergies’ sales will derive from oil and gas, according to the company’s climate plan, down from 90% today. The firm envisages that electricity generation and renewables will make up half its revenues, with hydrogen and renewable biofuels making up the rest. Between now and then it will try to prove that profits and the planet need not be at odds—even for an oil major. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

ON APRIL 1ST diggers at large construction sites in two Indian states broke ground on a pair of semiconductor factories. The plant in Gujarat, which will cost $11bn, is to employ 20,000 people and produce 50,000 silicon wafers a month. At the $3bn facility in Assam, 27,000 workers will package chips into processing units.The two projects are masterminded by Tata Group, India’s biggest conglomerate. In Gujarat it has teamed up with Powerchip Semiconductor Manufacturing Corporation of Taiwan. In Assam Tata is going it alone. It is all a giant bet that the Indian government’s dream of turning the country into a high-tech manufacturing powerhouse will materialise. And it illustrates the ambitions of Tata and its chairman, Natarajan Chandrasekaran, to move from a years-long restructuring firmly back into growth mode. “We have a big vision to play,” says Mr Chandrasekaran.In 2017, when Mr Chandrasekaran was handed the reins of Tata Sons, the group’s holding company, such a vision would have seemed preposterous. The group, which dates back to 1868, was in disarray. Mistimed acquisitions of foreign steel and car businesses were losing billions of dollars a year. A homegrown $1,300 car for the masses was a flop. Of its hundreds of affiliated firms only Tata Consultancy Services, the IT-services giant Mr Chandrasekaran ran at the time, was a real winner.Chart: The EconomistIn his first three years in the top job he consolidated the corporate sprawl into 30-odd listed businesses and, importantly, gave them a new focus. In 2020 a car model, the Nexon, was reconfigured into an electric vehicle and became a smash hit. Today Tata Motors, the group’s car unit, sells one in seven passenger cars in India, up from one in 20 four years ago. Some of the group’s underperforming European steel mills are being shut and the domestic steel business is riding India’s economic boom. An upsurge in Indian holidaymaking has transformed the hotels subsidiary from a money pit into a cash machine. Air India, bought from the government in 2022, is enjoying a similar tailwind. The combined market value of Tata’s listed affiliates has shot up from around $140bn in 2017 to roughly $400bn (see chart). The group’s ratio of net debt to income has plummeted from eight in 2020 to just 2.4.This success has given Mr Chandrasekaran the confidence—and the financial muscle—to pursue new ventures, most notably in chipmaking. Past efforts to create a domestic semiconductor industry have failed. A government-led effort in the 1970s went nowhere. Promising talks between India and Intel broke down in 2007 because the government in Delhi was dragging its feet, the American chipmaker’s boss grumbled at the time. Investment went to China and Vietnam instead.Under the current prime minister, Narendra Modi, things are moving considerably faster. He hopes to lure production from China, starting with less advanced chips of the sort used in cars and appliances and then gradually moving towards the cutting edge. His government is believed to be footing around half of the capital costs of new chip factories, including the ones in Gujarat and Assam, with states chipping in another 20%. Even so, the projects represent a big wager by the private sector, and by Tata in particular. In January 2023 Mr Chandrasekaran said that the group’s capital expenditure would amount to a staggering $90bn over five years. A slug of that would be spent directly by Tata Sons on semiconductors, where the company wants to be present in everything from design to packaging.The idea that India can become a chipmaking champion strikes some observers as bonkers. Raghuram Rajan, a former governor of India’s central bank now at the University of Chicago, decries all the vast subsidies for commoditised chips, especially at a time when richer places like America and Europe are pouring billions into production at the cutting edge. India would be better off, he thinks, funding its cash-strapped engineering schools and focusing on areas that require less investment, such as chip design.Mr Chandrasekaran disagrees. He reckons domestic buyers alone will be spending $100bn a year on chips by 2030, up from $40bn today. His firm is one of the few in India that can carry out big projects fast. It has recruited 75 executives from abroad with expertise in the chip business. Some 70% of capacity in the Assam factory, due to start production in 2025, has already been contracted for by global customers. What is a fanciful initiative for India may still be good business. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

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WHEN BOB IGER returned to the top job at Disney in November 2022, some anticipated a fairytale ending to the entertainment giant’s troubles. In February last year Nelson Peltz, a feared activist investor, called off a campaign by his hedge fund, Trian Partners, for a shake-up after Mr Iger announced measures to slash costs and otherwise improve Disney’s fortunes.With the company’s share price languishing, however, Mr Peltz returned to the warpath in October. Blackwells, another activist investor, launched a campaign of its own. Both sought seats on Disney’s board, arguing it had grown too chummy with Mr Iger and failed to find a viable strategy amid the decline of “linear” TV.Chart: The EconomistOn April 3rd both activists’ candidates were rejected by shareholders at Disney’s annual general meeting (AGM), by what the company said was “a substantial margin”. This has handed Mr Iger what he surely hopes is a decisive victory. Investors regained faith in Disney’s boss after an earnings call in February, when he reported that losses in its streaming business, including Disney+, had narrowed sharply in the final quarter of 2023, and trumpeted splashy new initiatives including a partnership with Epic Games, a video-game developer, to incorporate Disney characters into its popular “Fortnite” franchise. The announcement that Disney would increase its dividend by 50% and repurchase $3bn of shares also went down a treat. Its share price jumped by 11% the following day, and has kept climbing since (see chart).At the AGM Mr Iger declared that Disney has “turned a corner and entered a new, positive era”. Yet such triumphalism is premature, for Mr Iger still has much work to do, in three areas especially. The first is to generate the “double-digit” operating margins in Disney’s streaming business that he has promised investors. That will require a lot more subscribers, to provide economies of scale, which may put Mr Iger in a bind. To stem losses in the business he has jacked up prices, undermining growth. Between the third and fourth quarters of last year the number of subscribers to Disney+ (outside India) shrank by 1.3m.What is more, over half of the $7.5bn in costs Mr Iger has pledged to slash are to come from Disney’s content budget. That will hardly help the company to grow, and could undermine a second of Mr Iger’s promises—to restore Disney’s creative magic. In his letter to shareholders from 1966, the last before he died, Walt Disney declared a disdain for sequels. Mr Iger, by contrast, is an avid fan. Of the 15 forthcoming films he mentioned in his presentation in February, all bar one were sequels, prequels, spin-offs or remakes. Mr Iger applauded a greater reliance on franchises as a “smart thing”. Results at the box office, however, have been disappointing. Last year Disney lost the top spot for global cinema-ticket sales, to rival Universal, for the first time since 2015. On March 31st it was reported that last year’s Indiana Jones film, a Disney reboot featuring an 80-year-old Harrison Ford, took in $134m less at the box office than it cost to produce.The third promise Mr Iger must still fulfil is to find a more durable successor than his last pick, whom he then supplanted. Worryingly, three of the four directors on Disney’s succession-planning committee were involved in that bungled process. Already Mr Iger’s two-year contract has been extended until the end of 2026.If Mr Iger trips up, the interlopers may return. In his remarks at the AGM, Mr Peltz noted that, regardless of the outcome of the vote, he would be “watching the company’s performance”. The veteran activist, too, may be a fan of sequels. ■ More

FOR YEARS foreign companies were desperate to get into China, and faced formidable bureaucratic obstacles in their way. Now many are getting out. Over the past year several foreign law firms have closed some or all of their Chinese offices. Orrick, Herrington & Sutcliffe, an American one, said on March 22nd it would shut the Shanghai office it opened 20 years ago. Another, Akin Gump Strauss Hauer & Feld, plans to exit China altogether this year. Some global investment banks are pruning their Chinese staff. So are a few large accountancies and due-diligence groups. In 2023 foreign direct investment in China fell to its lowest level in 30 years.One reason for foreigners’ change of heart is the sorry state of the Chinese economy. Of the 18 largest multinational companies that report their earnings from China, 13 saw annual revenues there fall in 2023. Qualcomm and Samsung, two technology giants, recorded sales drops of more than 20%. Apple sold nearly a quarter fewer iPhones in the first six weeks of 2024 than it did in the same period the year before. In February Tesla shifted 19% fewer electric cars. Weak Chinese sales are the main reason why Kering, the French owner of Gucci, expected to flog a fifth less of its bling in Asia in the first quarter.President Xi Jinping and the Communist Party are keenly aware of these problems. And they care. At least that was the message broadcast loudly at the China Development Forum (CDF) in Beijing on March 24th-25th, and echoed a few days later at the Boao Forum, China’s answer to Davos. The mood at both jamborees was decidedly better than last year, when it was spoiled by a suspected Chinese spy balloon which floated above America before being shot down on the order of President Joe Biden. Many Western corporate bigwigs who stayed away were back; more than 80 foreign chief executives turned up in Beijing, including far more Americans. In Boao a senior official promised that China would make it easier to move capital in and out of the country. Two days earlier, at a separate event, Mr Xi assured a handful of American CEOs that China would continue to reform and open up.Participants report that Mr Xi and party officials are doing more now than in the past four years to stress that China is still open for business—a nice change after the pandemic years, when China’s leaders self-quarantined themselves from the outside world. “At the very least the meetings showed there is a strong desire to communicate,” says a boss who attended the CDF both this year and last. Earlier in March the State Council, China’s cabinet, launched a 24-point “action plan” for attracting foreign investment. It included familiar ideas such as protecting intellectual property and promoting trade agreements, and welcome additions such as fostering cross-border data flows. A few weeks later the main internet regulator eased some onerous data rules that in the past two years have made foreign businesspeople nervous about routine things such as sending emails to colleagues abroad.The trouble is that Mr Xi’s desire to lure back foreign business runs up against his other objectives. Observers describe his leadership model as “wanting this, that and the other”. Foreign companies are to do business in China but keep their hands off Chinese data. Multinationals are to double down on China and homegrown brands are meant to give them a run for their money. China’s technology industry is to decouple from the West while attracting Western investment. And global businesses are to like all this, never mind that it works against their commercial interests.Marxist theories of the sort Mr Xi likes to elevate may be able to resolve these contradictions. But capitalists see trade-offs and choices. And business logic increasingly argues in favour of greater circumspection about China.Consider data flows. Regulators may have loosened some restrictions but weeks earlier they tightened others, by updating a state-secrets law for the first time since 2010. The law now covers “work secrets”, or information that is “not state secrets but will cause certain adverse effects if leaked”. The vague wording gives security agencies broad powers to consider any communication between foreigners and Chinese employees as a potential violation. On March 28th, as foreign bosses mingled with party ones at the Boao summit, the Ministry of State Security released a six-minute instructional video. In it a Chinese engineering company is convinced by foreign investors to allow a foreign due-diligence firm to investigate it. An executive at the company travels in time to visit an incarcerated version of his future self, who warns him not to hand over company secrets to the investigators. When, back in reality, they ask him to share sensitive information, the enlightened executive reports them to the authorities instead.SpookedThe lessons of the film are as unsubtle as the acting. For Chinese viewers, it is that foreign investors and consultants could be working for hostile foreign governments and must not be trusted. For foreigners, it is not to look too hard into obvious material concerns such as a company’s supply-chain vulnerabilities or its links to the state, which could make a business susceptible to Western sanctions.Any such investigation of China’s chip industry, a big target of American restrictions, has long incurred the party’s wrath. Now less sensitive sectors, such as electric vehicles (EVs), batteries, renewables and biotechnology, are increasingly out of bounds, too. Chinese executives at the Beijing branch of a climate consultancy were recently questioned by security agents about the information it collects on local firms and to what foreign entities it has divulged it. The interrogation came as a surprise, because the outfit had enjoyed seemingly strong support from China’s environmental regulators. The incident led it to slim down its Chinese operations and try to eliminate reporting lines between staff based in China and in other countries.A further reason foreigners are having second thoughts about China is stiffening local competition, a lot of it given a leg-up by the state, one way or another. Government support for makers of EVs, batteries, solar panels and wind turbines has created oversupply and pushed down prices. This has been a blessing for foreign importers of Chinese-made components. For multinationals trying to compete in China it has been a curse. Margins on sales of electrolysers, bulky machines used to produce hydrogen, are said to have dropped to almost nothing in recent months. In March BYD, a Chinese EV giant and longtime recipient of state largesse, dropped the price of its compact electric car to just $9,700, perpetuating a price war that has forced Tesla to sell its EVs for less. Foreign industrial firms face hundreds of local rivals that appear to operate in the red. In 2023, 22% of industrial companies in China lost money, an all-time high.Officials also invoke a mix of national security and national pride as a reason to choose Chinese products over Western ones. Apple must contend not just with downbeat consumers but also with a new line of smartphones from Huawei, a Chinese tech champion targeted by American sanctions—and with public servants and employees of state-run firms being told not to buy iPhones, lest they contain backdoors through which the American government can steal information. Teslas have been banned from some government facilities and airports on the grounds that they film their surroundings. State-owned enterprises and government agencies have been instructed to replace chips from Intel and AMD, two American semiconductor firms, with Chinese-made ones by 2026. They are also to phase out Microsoft’s Office software over the next few years.For many foreigners, overcoming these obstacles may be a price worth paying. In a survey of 354 multinationals conducted by Morgan Stanley, a bank, two-thirds of foreign firms were optimistic about China in the last quarter of 2023, the most in two years and up from a trough of 46% in the first quarter of 2022. For some companies China is a place to sharpen their competitive edge: if they can make it there, they can make it anywhere. Plenty want to preserve access to China’s vast market and manufacturing base. On March 21st, to much fanfare, Tim Cook opened a new flagship store in Shanghai and reiterated that “There’s no supply chain in the world that’s more critical to us than China.” To ram the point home, four days later he told an audience at the development forum in Beijing, “I love China and the people.”Yet to many Western ears, Mr Xi’s commitment to openness rings increasingly hollow. His regime can repeat such bromides only so many times before you grow cynical, says a weary boss of a multinational’s Chinese branch. In the long run a surfeit of foreign cynicism may end up being even more damaging to China’s economy than a glut of EVs and electrolysers. ■ More

“THE DIFFICULTIES inherent in such a reorganisation were many and serious.” That is how in 1893 Charles Coffin, the first chief executive of General Electric (GE), described merging three businesses into what became the iconic American conglomerate. More than 130 years later Coffin’s latest successor, Larry Culp, must be feeling similarly about doing the reverse. On April 2nd GE split into two public companies: GE Aerospace, a maker of jet engines, and GE Vernova, a manufacturer of power-generation equipment. A third, GE Healthcare, a medical-devices firm, was spun off in January 2023.Chart: The EconomistInvestors are not mourning the end of GE as they, their fathers, grandfathers and great-grandfathers knew it. On the eve of the split the company’s market value hovered at nearly $200bn—and more than $230bn if you add GE Healthcare’s (see chart 1). In November 2018, shortly after Mr Culp took over as boss, the whole group was worth $65bn, the least since the early 1990s. That June it had been ignominiously kicked out of the Dow Jones Industrial Average (DJIA), an index of American blue chips. In the past year both GE and GE Healthcare have handily outperformed the DJIA. Their shares have also done better than those of most American spin-offs (see chart 2). Mr Culp says that the group could not continue as an “all-singing, all-dancing GE”. Instead, GE’s corporate progeny will become less general and, amid the energy transition, more electric.Chart: The EconomistFor much of its history GE was synonymous with size. Under Jack Welch, the acquisitive CEO who ran it from 1981 to 2001, it became the world’s most valuable company. Subsequent losses at GE Capital, its bloated finance arm, and troubles in its core industrial businesses laid the giant low. Jeff Immelt, Welch’s successor, sold off GE’s media, home-appliance and, belatedly, finance assets but spent $11bn on the ill-timed takeover of a power-and-grid business of Alstom, a French conglomerate, and $7bn on a stake in Baker Hughes, a purveyor of oil-industry gear. John Flannery, who replaced Mr Immelt in 2017, had the idea of spinning off the health-care division and focusing on GE’s core businesses, aviation and power generation. But he was dumped barely a year into the job, as GE’s share price cratered.As a result, Mr Culp, the first outsider to run GE, inherited a mess. GE ended 2018 with a $23bn write-down of its power business (largely due to the Alstom deal), a $15bn capital shortfall in a rump reinsurance business, a net annual loss of $22bn and more than $130bn in debt. On paper his rescue plan looked similar to Mr Flannery’s: hive off health, double down on aircraft engines and power. The way he went about it, though, was different.He halted his predecessor’s proposed spin-off of the health-care business, realising that GE would be too weak in the short run to survive without the health unit’s income. Instead he sold GE’s biotechnology business to his old employer, Danaher, another industrial group, for $21bn; accelerated the move towards cleaner energy by divesting the stake in Baker Hughes; and flogged GE’s aircraft-financing unit for more than $30bn. He also cut the quarterly dividend from 12 cents a share down to a cent. Taken together, these moves reduced GE’s debt by some $100bn.Critically, Mr Culp understood that reforming GE required not just changes to its structure but also to its operations. Six Sigma, a series of techniques championed by Welch that aimed to keep manufacturing defects below 3.4 per million parts, had become a barrier to innovation and was out. Instead Mr Culp introduced GE to “lean management”, which looks for small changes that add up to big improvements over time. This approach, pioneered by Toyota in Japan, involves managers solving problems by visiting the factory floor or their customer rather than from the comfort of their desks.Today GE executives pepper their disquisitions with Japanese terms such as kaizen (a process of continuous improvement), gemba (the place where the action happens) and hoshin kanri (aligning employees’ work with the company’s goals). More important, Mr Culp and his underlings routinely spend a week on the factory floor alongside workers. The company credits this system for improvements such as reducing the total distance a steel blade for its wind turbine travels during the manufacturing process from three miles (5km) to 165 feet (50 metres), and shaving the time to build a helicopter engine from 75 to 11 hours.This puts the two daughter firms in fighting shape to thrive as their sister, GE Healthcare, has done. In 2023 GE Aerospace and GE Vernova generated combined revenues of $65bn, up from $55bn the year before. Engines made by GE Aerospace, the group’s most profitable division, which Mr Culp has chosen to run after the break-up, power three-quarters of all commercial flights. GE Vernova’s turbines generate a third of the world’s electricity.Like many successful managers, Mr Culp also has luck on his side. Demand for passenger jets—and thus the engines that keep them aloft—is rebounding sharply from a pandemic slump. With a backlog of orders until the end of the decade, GE Aerospace expects adjusted operating profit to surge from $5.6bn in 2023 to $10bn by 2028. The turbulence at Boeing, which GE supplies with engines for the planemaker’s troubled 737 MAX planes, means that airlines facing delayed deliveries of these narrowbody workhorses will need to stretch their exisiting fleet. That, points out Sheila Kahyaoglu of Jefferies, an investment bank, increases demand for GE Aerospace to keep older engines going. Last year the services business accounted for almost 70% of the division’s revenues.The winds look equally favourable for GE Vernova. Operating margins in the business rose from low single digits in 2019 to almost 8% in 2023. The International Energy Agency, an official forecaster, estimates that demand for electricity generation will grow by more than half by 2040 as power-hungry data centres and electric cars guzzle more electricity. America is lavishing subsidies and tax breaks on renewable energy projects. Scott Strazik, a GE veteran who will run GE Vernova, believes that this will help the company attain the scale necessary to spread the high costs of wind-turbine manufacturing, which is still lossmaking.GE’s run of good fortune may not last. Projections for traffic in the notoriously cyclical airline business may turn out to be too rosy. If Boeing doesn’t pull out of its nosedive GE Aerospace’s order books could take a hit. The transition to clean energy in America, GE Vernova’s largest market, has been fitful even under Joe Biden, its climate-friendly president. Should the carbon-cuddling Donald Trump return to the White House next year, he has vowed to gut green subsidies. GE’s businesses, in other words, face many and serious difficulties ahead. But at least reorganisation is not one of them. ■ More