GE to split? Here's what it could mean for Greater Cincinnati

General Electric is considering splitting itself apart, a move that could make Evendale-based GE Aviation a standalone company – and spell trouble for The Banks development Downtown.

CEO John Flannery floated the idea on a conference call with investors Tuesday after warning upcoming earnings would be hit by insurance charges. During the call, Flannery signaled the different pieces of the company may be worth more apart than if they stay together.

"I am more convinced than ever that we have substantial underlying strengths and value that have been suppressed in the current context. As a result, we are looking aggressively at the best structure or structures for our portfolio to maximize the potential of our businesses," Flannery told analysts. "We need to continue to move with purpose to reshape GE. We will continue to rigorously review our alternatives."

Flannery promised investors to update them this spring on the company's plans.

A GE split could crack plans at The Banks

General Electric employs about 9,000 workers in Greater Cincinnati and Northern Kentucky, including more than 1,300 at GE's Downtown Global Operations Center at The Banks.

First opened in 2016, the center was seen as a stablizing presence at The Banks.

By injecting Downtown workers into the riverfront development, many were expected to provide needed foot traffic to nearby restaurants and some might even choose to live in area's residential units.

But as GE's financial woes deepened and its investors grew more impatient, GE slowed hiring at the center as a new CEO replaced long-time leader Jeff Immelt and a new review of operations ensued.

Splitting apart GE could spell doom for The Banks operation, which was set up to consolidate back-office functions for multiple divisions. One of four similar centers worldwide, the Downtown office is designed to service multiple industrial segments. It's the only one located in the U.S.

GE officials said Tuesday they had no additional details beyond their CEO's statements. City officials did not return messages seeking comment.

Todd Portune, chairman of the Hamilton County Board of Commissioners, said GE's plans weren't clear enough to assume the Global Operations Center was in jeopardy. The commissioners along with the city and developer oversee The Banks project.

“I think it’s important for everybody to take a deep breath,’’ Portune said, labeling talk about GE leaving The Banks or significantly reducing its workforce there “speculation.’’

If GE left, however, he said the company would likely be required to pay back a large chunk of the more than $100 million in tax incentives and abatements used to lure them to the site.

“GE has taken no steps with respect to its hub operations here,’’ Portune said. “We at the county still look at GE as a solid partner with us at The Banks. We’re looking forward to a long-term relationship with them at The Banks.’’

GE chose Cincinnati for the Global Operations Center facility in 2014.

The Global Operations Center won more than $100 million worth of incentives from the city, county and state to locate at The Banks. State officials report they have already issued $1 million in tax credits.

The city awarded GE a 100 percent property tax abatement for 15 years worth $12.5 million and an 85 percent earnings tax break, estimated at $23.9 million over 15 years. In addition, the state of Ohio granted GE a job creation tax credit that will reimburse the company for 85 percent of payroll taxes via a credit on its corporate income tax worth $51.7 million over 15 years.

Is this 'the Peltz effect?'

GE's potential change of plans comes months after hedge fund investor Nelson Peltz was given a seat on the GE board of directors after years of disappointing results.

In October, GE announced the addition of Peltz' Trian Fund Management co-founder Ed Garden to the board. The move came a week after the resignation of Immelt, a Finneytown native. Days later, GE cut its dividend in half to preserve cash.

Peltz took a stake in GE at the urging of Immelt in late 2015, but the pressure increased as the company continued to struggle and its shares lost value. Peltz was seen as the force behind the company's decision last year to ramp up planned cost cuts from $2 billion to $3 billion.

Peltz's influence is of interest in Cincinnati because he is set to join Procter & Gamble's board in March after a prolonged fight. Last month, P&G said it would add Peltz to the board after the largest proxy battle in history.

P&G has seen a lid on its own sales growth and stock price since the Great Recession as overseas economies sputtered and more U.S. consumers gravitated to store brand household products.

GE Aviation remains healthy

The vast majority of General Electric's jobs in the region are at GE Aviation, which remains a bright spot for the whole company. The unit produces aircraft engines for both commercial and military jets and is riding explosive growth in aviation around the world.

GE Aviation is the parent company's second-largest business unit and the most profitable, generating $4.9 billion in profits on $20.2 billion in revenues during the nine months ended Sept. 30.

If carved out into a separate company, it would be large enough to make the Fortune 500.

Based in Evendale, the unit employs more than 7,500 in the Greater Cincinnati region.

GE's CEO alluded to a possible breakup as he warned the company will record a massive $6.2 billion charge to boost insurance reserves and it would need to reserve $15 billion total over seven years.

A Wall Street darling during the 1980s and 1990s under CEO Jack Welch, GE badly sputtered in the new millennium as investors grew skittish of conglomerates following the Enron meltdown.

The company also grappled with slowing growth in once-stalwart consumer businesses that made it a household name and the financial crisis, which struck its once-mighty financial operations.

Under former CEO Jeff Immelt's 16-year tenure, GE jettisoned most of the consumer operations, such as its appliance business, much of its lending business and exited its media empire when it sold its ownership of NBC. But the makeover also moved GE into the oil & gas business have weighed on the company after crude prices dropped sharply in the last three years.

Randy Tucker contributed.