Watch CNBC's full interview with General Electric CEO Larry Culp

earlier in the program to my point we had Dave Calhoun of course the CEO Boeing who joined us and he said Larry it's gonna be perhaps three to five years for them to get back to 2019 levels when you hear that how do you have to adjust your business and do you feel like you've already done it to adjust for that new reality David good morning thanks for having me on I had an investor call earlier so I missed the interview with Dave but we speak frequently as we do with all of our customers here I think what we said on our call and I would repeat here is that the first and most important step we take as a company in the face of this pandemic to make sure we come out on the other side a better stronger genie is to embrace the reality of what we're singing and clearly the pressure is going to be no greater in the short term and maybe over the medium term for us than it will be in aviation given the airlines are trying to conserve cash parking planes bringing flight schedules down postponing in some cases orders of new planes that that hits us and you saw that in the first quarter numbers numbers that we didn't particularly like and acknowledged that are going to be more challenging here in the second quarter which is in turn why we doubled the amount of cost actions that we're taking in aviation up to a billion dollars and cash actions up to two billion all the while broadening those same efforts to a two billion dollar level on the cost side across our company three billion on the on the cash side David I don't think you're are you not I don't think you're ever done preparing or reacting in a moment like this I don't think we've taken a particular view as to whether this is a two year or a three or four year recovery we're mindful of those conversations we just need to make sure that we're taking the appropriate actions here in the short term while protecting all the things that over decades the may GE aviation such as strong franchise in the commercial aerospace industry and to that point when it comes to liquidity where a lot of investors but you can imagine or focus you end the quarter with 47 billion dollars in cash and you said on the call that's really to cover capital long-term debt maturities now through 2021 and actually after the April actions you were down to 30 billion in maturities for 2022 I believe is it going to be enough Larry or do you need to do more well I think with the closing of the biopharma transaction the the 20 billion dollars that we receive giving us that 47 billion of liquidity at the end of the quarter were well-positioned from a liquidity perspective for what what we see in front of us David we would never say that that's all we need once and forever right part of the reason we step back from from offering a formal guide today was there still I think a great deal of uncertainty out there relative to the economy at large how the pandemic impacts our various businesses so we're going to control what we can control we're pleased to have that liquidity position again the costs and cash actions will help us a great deal here in the short to medium term and we will allow we'll play it forward from here mindful that we want to make sure that we continue to bring those leverage levels down we're unlikely to hit the targets we hit envision and very much thought possible just just weeks ago but make no mistake we are committed to making sure that we bring down those leverage levels in time yeah well Larry you were about a year and a half into what is a long term turnaround at GE one that really just appeared to be gaining momentum when the virus hit how then do you sort of reset now to think about again the long term opportunity that you were trying to see is while you're still dealing with life or death issues for the company well you know in many respects David having an 18-month running start helps a great deal right because we were already in the process of improving and changing a good bit about our company so I think we just get up next day and embrace this reality we wish there were otherwise but this ultimately will allow us to drive more change our new leaders will assimilate more more quickly the people we brought into the company the last several months we're going to be able to drive again more not only cost reduction but more process improvement we talked about cash actions we talked about inventory talking about inventory we're talking about accelerating the pace of lean implementation in our in our factories we can't move people around as freely as we could before in our service businesses it's going to require us to use digital technologies we already are more today than we were just a few months ago so those are the sorts of things when the dust settles David that I think are going to show that we really have positioned the company long-term well through through the downturn while at the same time we need to take some of the actions that are perhaps are more tactical to make sure we we work through those near-term pressures Larry's Jim tonight you do because this kind of job like at this point but one thing that also happened this quarter was that the president seemed to be interested in a company that really is chiefly a scanner company all of us have had MRIs know that you got to play the music because it's loud but you make a lot of money when they wanted the president want you to make mint ventilators not your strength but by the end of the quarter I kind of felt like it was you became ventilators are us pretty important we are a proud ventilator manufacturer not not our biggest business in as you highlight but having been on the front lines in health care really since Wuhan we knew this was going to be an opportunity for us to play a role not only here in the US but really around the world as the case count mounted so we took our care stream unit doubled production will double it again here by the by the end of the quarter all the while tending to the rest of the business and in addition we are working with with Ford to bring on a lower cost unit at higher volumes where we're handling a good bit of the design they're handling much of the supply chain so we're we're pleased to to player roles probably a small role in the grand scheme of things but so much else is what we do is is critical here we've seen our CT scanners importantly deployed in these same situations our patient monitors even some of our digital monitoring solutions have been been helpful in making sure that the the caregivers who are so challenged and doing such important work here have the best tools possible at their disposal one of the things that I've found in this quarter is that we've learned is that we outsource a lot of things to other countries always with the highest quality you're bringing back some manufacturing to United States aren't you well our supply chains are in in flux most times Jim is demand changes and and the like but we tweak we have in a number of instances brought back certain operations to to the US yes aircraft India dear I'm sorry Jim can you say that again some parts from India to here seem to be a trend I'm putting this out there because yet we've we've taken our future mortgaged it to a lot of countries that I kind of liked but now I'm not so sure they are necessary in our best interest well I think ge will always be a global company and as a result we're going to be in most every market around the world designing building selling and servicing I'm I'm a big believer in trade I think when we get to the other side of this we may have a different trade dynamic and that will require that we have more of that capability here in the US and that'll be a transition over a number of years our standards Jim in terms of safety in terms of quality the world over are are constant that's the way we want to run our company and that's the way we want to serve our customers all around the world Larry when we would typically bring you on for an interview which we always appreciate we might focus on power of course which had been certainly one of the key areas you were focused on in terms of the turnaround at the company what are we seeing right now given the dramatic fall in energy prices and oil prices in particular right now in terms of your gas power equipment business your gas power services and your overall overall power portfolio David B the power business particularly the gas power business that you're asking about continues I think a multi-year turnaround though itself will see some pressures here we we share it on the call that by large we think we're going to see from a turbine delivery perspective another strong year in that regard but I think that is the year plays out just given some of the financing pressure say here in the US with the IPPS perhaps in Middle East with certain customers we think demand for new orders and thus down payments could could be softer than we anticipated we also saw in our service business some challenges here as customers didn't necessarily want to have our service people on site and where that was optional they rescheduled some of those outages until the the second half of this year when we have a little bit more clarity as to Coba 19 we certainly had challenges as well moving our people around the world to perform some of that work in addition to some of the supply chain friction that we've been working through so it was it was a decent quarter another quarter of progress it wasn't perfect but I'm encouraged by what I see as much in the financials as much as I see in the the operating reviews we do with the businesses that they're that they're on their way but no GE business is really immune David from some form of kovin induced pressure here yeah well aware which leads me to my next question which is your decision to cut capex how do you get to the proper number at this point in terms of what you need to cut at the same time without injuring perhaps your two your three down the road in terms of your ability to grow david be the current roll-up has this reducing our capital spend year on year about twenty five percent I wouldn't say that's a final number we don't want to spend one dollar more than we need to this year all the while making sure we don't shortchange the long term how do you do that I think it actually started back last summer when we went through the the multi-day in-depth strategic reviews we did with each of the businesses right to make sure we have a clear consensus as to where we're trying to take the business in the intendent decisions and commitments investments we need to make with that that strategy in mind so we come into a moment like this rather than it being strictly a financial exercise let's cut gap acts in this business from X to Y we certainly want to look for reductions we want to apply as much discipline as we can but all the while we want to make sure we retain the context of the strategic intent we have longer term for the business so these are ultimately judgment calls one by one but I really think we set the stage for better decision making last summer of course not knowing we would be in this environment today Larry what happened in Grand Forks North Dakota did you have your employees wearing masks did they do any temperature check what the heck happened and I need to know what were you protecting those employees correctly because I do believe that without masks and without temperature checks we could have something as disastrous as this happen many times yeah we're out Jim what would happen at our renewable energy wind turbine blade facility in North Dakota is really disappointing we had a we had an outbreak there the the site has been closed for for two weeks we've been working with the the team on the ground working with the governor everybody's been very supportive we had our standard PPE and procedures in place we're still investigating the root cause of what happened to the the team members there who have been impacted or infected with the with the virus but make no mistake safety is the highest priority we have at GE and from the time people enter our sites temperature checks PPE physical distancing at all and the rest that very much is the way we have been operating in the facilities that have been up and running through this this period and is certainly the construct in the minds that we have later this year as we look to bring back those that who have been working from home you know on that note Larry to end how do you view the new world in terms of working and working together I mean do people who put together a jet engine have to remain six feet apart how are you viewing the return to work for many of your employees when that day comes well David it will be a challenge in a thousand different ways right as we we rethink the way work is performed in a factory at a job site in an office but again safety will be the the overarching priority here and I think we're going to take it step by step trying to leverage the experience we have from most facilities be it and North Dakota those in China relative to best practice let alone all of the the help and input we're going to get from local state and and and and federal regulators so it'll be a step-by-step process working with with everyone we possibly can to do this effectively and well to make sure that that folks aren't only safe but that they they have in that psychological comfort as well very important to us as we look forward to the rest of 2020 yeah as we all look forward to perhaps a different day coming as soon as possible Larry thank you as always for joining very much appreciate it David Jim thank you you

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Id: HWFIs15S3kI

Length: 15min 53sec (953 seconds)

Published: Wed Apr 29 2020