American business and industry has a brighter future than people seem to think, according to GE CEO Jeff Immelt who spoke recently at the University of Rochester’s Simon Graduate School of Business economic and management risk conference in New York City. “There are 1 billion people around the world due to join the middle class by 2020. There are also 1.7 billion in the world without electricity,” he said. “These are growth opportunities for American businesses.”
Last year some were critical of President Obama for appointing to his outside council of economic advisors, Immelt, who led a company that had earned a reputation for expanding its employment overseas while paying little or no federal taxes at home and sitting on a cash hoard of $79 million, as part of the President’s council of economic advisors.
If stung by such criticism Immelt kept it to himself, but underscored his company’s role as a job creator in the markets it serves. “As a country we need to put people back to work,” he said. “I am not going to apologize for putting jobs outside the U.S., because we also put jobs in the U.S. as a major exporter.”
Last March Immelt told Fort Wayne’s Journal-Gazette that GE will add more than 15,000 jobs in the three years through December 2014. About 1,100 will be outside Detroit in a center for information technology, a field known for being outsourced. The pivot is something of a turn for the company, where Immelt’s predecessor Jack Welch was once quoted by CNN that the ideal situation for business would be to “put every plant you own on a barge to move with currencies and changes in the economy.”
Such sentiments are considered impolitic today.
When Immelt took control as CEO in 2001, 70 percent of GE’s business was domestic. Today 65 percent is derived from outside the U.S. Immelt says GE is the country’s second largest exporter after Boeing. In 2005, the last year GE’s domestic employees outnumbered non-U.S. employees at just over 51 percent. Today that number has dipped to 46 percent of the total. The company is quick to point out that for each of its domestic employees 5.2 additional domestic jobs are supported, although it doesn’t explain how it arrived at this figure.
“The global trend is unyielding,” said Immelt. “Every business leader regardless of size of company has to face it.” GE’s CEO was emphatic that American business had the capacity to compete in world markets. “A good American business can compete with any company in China,” he said. “Our costs and products are pretty good across the board. We may not be perfect. Our companies don’t always get it right, but we are getting the question right.” He added that in the emerging markets that are most important to the company’s growth for the next three years are places he could not have found on a map when he took the job in 2001.
Immelt allowed that Chinese authorities will deny access to some markets even for GE. “I’ve resigned myself that we may never sell them a locomotive in my lifetime, but our aviation business there will prove larger than our business in the U.S.,” he said. His advice for pursuing opportunities in China is succinct. “Read the five year plan. They tell you what’s important to them in the plan.”