Podcast Summary: Asianometry – "How Westinghouse Lost its Way" (Jan 18, 2026)
Host: Jon Y

Episode Overview

This episode delves into the rise and fall of Westinghouse Electric, an iconic American industrial giant second only to General Electric for decades. Host Jon Y charts the company's fascinating but turbulent journey from its 19th-century origins through its heyday as a powerhouse in electricity and engineering, up to its decline and eventual transformation into a media company–shedding light on the complex mix of strategic missteps, management culture, and changing market conditions that led to its undoing. The story offers important historical lessons on innovation, corporate focus, and the pitfalls of diversification.

Key Discussion Points & Insights

1. Origins and Early Growth (00:03 – 12:00)

• Founding Vision:

  • George Westinghouse, inventor of the air brake at 23, established Westinghouse Electric (1886) to power train control systems & commercialize AC power.
  • Licensed step-down transformer patents enabling long-distance AC power.
  • "Westinghouse Electric was George’s second big venture." [00:29]

• Competitive Landscape:

  • "War of the Currents" — fierce rivalry with Thomas Edison and Edison General Electric.
  • Resulted in heavy financial strain; led to an 1896 patent pool consolidating the U.S. electric industry as a duopoly.

• Management Weaknesses:

  • George’s centralized, non-delegative style and risky optimism led to overleveraging before the Panic of 1907, after which bankers sidelined him.

2. Rise through the 20th Century (12:01 – 28:30)

• Shift in Management:

  • Bankers (led by Guy Tripp) restructured the company post-George, improving finances and imitating GE’s management style.
  • Focused on traditional electrical equipment and expanded into radio and broadcasting (KDKA).

• Diversification and Innovation:

  • Embraced the "benign circle" — offering home appliances to stimulate electricity demand and, consequently, sales of turbines.
    • "Appliances caused households to use more electricity, which gets utilities to buy more GE and Westinghouse turbines." [11:27]
  • Created a central industrial lab in 1935 but produced little commercial output aside from notable advances in radar electronics.

3. Post-War Expansion and Turbine Troubles (28:31 – 44:00)

• Defense Boom:

  • Post-WWII, heavy involvement in military contracts (radar, nuclear reactors for subs, etc.)
  • Success in nuclear reactors, but failed jet engine venture.

• Falling Behind in Turbines:

  • Both GE and Westinghouse initially produced standardized small turbines, but GE pivoted quickly to custom, large, "reheat" turbines in the 1950s as market demanded.
  • Westinghouse was caught off-guard, understaffed, and initiated belated crash programs.
    • Quote: "We simply had to put on a crash program to find out the behavior of these materials..." [31:54]

• Industry Scandal:

  • Price-fixing scandal (late 1950s) involving GE, Westinghouse, and others, leading to over 1,800 court cases and harsh penalties.
    • "Some even went to prison. Imagine that." [38:00]

4. Diversification Mania and Strategic Drift (44:01 – 01:00:00)

• New Leadership & Decentralization:

  • Don Burnham (CEO, 1963) reoriented the company to escape GE's shadow.
  • Revised charter to allow operations in essentially any profitable business.
    • Quote: "In other words, all goes if it makes money." [48:36]

• Infamous Diversification Drive:

  • Acquired businesses ranging from mail-order watches to bottling, education, car rentals, and ocean engineering (even partnered with Jacques Cousteau).
  • Pursued city planning (Coral Springs, FL) for the "all-electric" community.
  • Diversification overstretched the company's focus and resources; internal management believed "we could manage anything," but in hindsight, it was "cope at worst." [53:11]
    • Quote from executive: "We had this conviction that we could manage anything." [53:11]

• Technological Lag:

  • Neglected R&D in turbines led to legal, reputational, and competitive disasters as supercritical turbines became the industry standard (mid/late-1960s).
    • Quote: “Westinghouse turbines experiencing failure rates four times higher than their competitor with legal implications later on.” [57:59]

• Mixed Results:

  • Initial praise for Burnham, dubbed a "Lisa Su-esque savior," but losses and failed acquisitions (e.g., Longines Wittenauer, French elevator business) eventually overshadowed successes.
  • Burnham forced out in 1975 amidst financial crises.

5. Financial Strains and the Uranium Disaster (01:00:01 – 01:18:00)

• Uranium Fuel Contract Fiasco:

  • Westinghouse sold utilities fixed-price uranium fuel as part of turnkey nuclear plant contracts in late 1960s–1970s, betting fuel prices would stay stable or US government would release stockpiles.
  • After the 1973 oil shock, uranium prices soared—Westinghouse, unable to supply at contracted rates, faced $2B in losses (their entire equity base).
    • Host's dry humor: "Ha. Only a billion." [01:13:33]

• Utility Industry Paradigm Shift:

  • Demand for ever-larger turbines flattened after the oil crisis; a new focus on efficiency took hold. Growth in electricity consumption slowed dramatically; technology plateaued.

• Legal and Operational Troubles:

  • Multiple lawsuits (turbine defects, failed metro projects); $200M in claims by 1974.

6. Conglomerate Era, Credit Mess, and Final Sell-Off (01:18:01 – 01:40:00)

• The Westinghouse Credit Time Bomb:

  • Credit division, initially established to finance appliance sales, shifted to high-risk commercial real estate lending in the 1980s.
  • Lax oversight—"Employees later recalled approving loans worth 110% of the property's value." [01:29:15]
  • Real estate crash, massive credit losses ($5B+), and executive bonuses despite disaster.

• Leadership Upheaval & Asset Sales:

  • Paul Lego era marked by denial ("saying that it wasn’t his mess, it wasn’t his fault" [01:33:45]), eventual ousting.
  • Michael H. Jordan (first external CEO) sells off industrial assets to pay down debt, acquires CBS and Infinity Broadcasting, and moves Westinghouse entirely into media.

• End of an Era:

  • By 1998, Westinghouse Electric sold its industrial and power generation businesses to Siemens, the rest morphing into CBS Corporation.
    • "With this, the traditional Westinghouse company's journey ends. The entity now moves forward... as CBS Corporation.” [01:39:35]

7. Epilogue: Nuclear Legacy and Bankruptcy (01:40:01 – End)

• Westinghouse's nuclear division sold to British Nuclear Fuels, later to Toshiba.
• AP1000 reactors proved disastrous: cost overruns, new regulations post-Fukushima, one project canceled, leading to Westinghouse's (and almost Toshiba’s) bankruptcy in 2017.

Notable Quotes & Memorable Moments

• On management:

  • "George was a brilliant engineer, but... that doesn't make for a great manager." [05:04]

• On diversification hubris:

  • “We had this conviction that we could manage anything.” (executive recollection) [53:11]

• On the shift to media:

  • “With this, the traditional Westinghouse company's journey ends. The entity now moves forward... as CBS Corporation.” [01:39:35]

• On the uranium contract disaster:

  • “It was essentially a short squeeze that put Westinghouse on the hook for $2 billion in losses, the total amount of shareholder equity. So it would have ruined them.” [01:12:37]

• Wry summary of leadership denial:

  • “But Lego and the rest of Westinghouse refused to rec reality, saying that it wasn’t his mess, it wasn’t his fault.” [01:33:45]

Timestamped Breakdown of Important Segments

• 00:03 – 12:00: Early history, George Westinghouse, foundational inventions, "War of the Currents."
• 12:01 – 28:30: Post-founder professionalization, the 'benign circle,' and lab-driven innovation.
• 28:31 – 44:00: Military contracts, postwar power boom, falling behind in turbine technology.
• 44:01 – 01:00:00: Don Burnham era, diversification spree, missed technological shifts.
• 01:00:01 – 01:18:00: Uranium contract disaster, lawsuits, and industry changes post-oil crisis.
• 01:18:01 – 01:40:00: Credit division crisis of 1990s, asset fire sale, transition to media conglomerate.
• 01:40:01 – End: Epilogue: sale of nuclear division, reactor failures, Westinghouse bankruptcy.

Tone & Language

Jon Y’s narrative is crisp, factual, and tinged with dry humor and irony, grounding complex business history in clear storytelling. The analysis is thoughtful, avoiding simplistic blaming (“We like the simple answers... dive into the history and things get murkier.” [00:10]), and focusing on nuance.

Summary for New Listeners

The episode chronicles the journey of Westinghouse from its electric power roots, through periods of innovation, scandal, and over-confident diversification, to its ignoble pivot into a debt-ridden media firm. The company’s inability to balance R&D and strategic focus led to a domino effect of failures–culminating in its industrial assets’ sale and the slow death of its brand in nuclear energy, underscored by brutal lessons in corporate strategy, technological disruption, and financial speculation.

For further exploration, Jon Y credits scholar Kenichi Miyata’s research on Westinghouse’s little-covered period (1950s-70s), and points listeners to previous episodes for more on the company’s nuclear afterlife.