Immelt on America going “all-in”

By Chrystia Freeland
October 20, 2011

I had breakfast this week with Jeffrey R. Immelt, the chief executive of General Electric, and the main dish on the menu was tough love. In an interview before a packed hall in Times Square, the boss of the more than a century-old $177 billion global behemoth told me that Americans can still win in the global economy — but that they need to fight harder.

“We are not trying that hard,” Immelt said. “We haven’t really tried as hard as we can to compete, educate and sell our products around the world and I think we can do better.

“The world just plays harder than we play,” he said. “Whether it is on exports or whether it is on foreign direct investment, the rest of the world plays for keeps. And we just don’t have a similar philosophy.”

Chancellor Angela Merkel of Germany has her own reasons for feeling grim, but she can take some comfort from the fact that Immelt pointed to Germany, whose version of capitalism Americans are accustomed to dismissing as plodding and inflexible, as one nation that is outselling the Yanks.

“Chancellor Merkel flies from Berlin to Beijing, there’s 25 German C.E.O.’s that get off the plane right behind her. And they connect the dots. They play hard, they play to win, they play for exports,” Immelt said. “We’re not all-in the same way that the Germans are all-in.”

Those are harsh words to hear from one of the foremost business leaders of the country that likes to think of itself as the world’s top capitalist dog. But Immelt’s must-try-harder message is becoming the conventional wisdom in the United States, and not just among the angry 99 percent of the Tea Party and Occupy Wall Street movements. The 1 percent think so, too.

One measure of this elite consensus was the echo of Immelt’s remarks in a speech that a different national heavyweight, Secretary of State Hillary Rodham Clinton, delivered a few blocks north and a couple of days earlier at another New York power breakfast.

“We have to get better at playing offense,” Clinton said. “Other countries are much more on the same team between business and government, and we need to be back on the same American team.”

When populists on both the left and the right are angry enough to take to the streets, and when both a Democratic stateswoman and a Republican industrialist use almost identical language to describe America’s poor performance in the global contest for business, you can safely conclude this is a country suffering from serious self-doubt.

That inner-directed gloom fits uneasily in a national culture that still tilts toward a faith in self-improvement, second chances and, most important of all, a first-place finish. Which is probably why Immelt’s certainty that, if the United States does try harder, “I’m completely convinced that we can compete and we can win” struck such a receptive chord.

“Our competitiveness in this country today is the greatest it’s been in 25 years,” he said. “I have never seen our competitiveness as solid versus India and China as I do today.”

He repeated: “We need to be all-in.”

The competition Immelt and Clinton want U.S. companies to win is the battle for dominance in the global marketplace and for the checkbook of the growing global middle class.

“There are going to be one billion consumers joining the middle class in Asia. I think for us to reduce unemployment, exports are going to be a key way to do it,” Immelt said. “It’s this country’s only destiny just because most of the consumers are some place other than here.”

As a cautionary counterexample, Immelt cited Japan. “Look, when I was a young guy, when I first started with G.E., Jack Welch sent us all to Japan because in those days Japan was gonna crush us,” he said. “And we learned a lot about Japan when we were there. But over the subsequent 30 years, the Japanese companies all fell behind. And the reason why they fell behind is because they didn’t globalize. They didn’t have to go out and sing for their dinner in every corner of the world. That’s not the case with G.E. It’s not the case with other American multinationals.”

Immelt’s sunny enthusiasm for export-led growth captivated his audience. That is partly because Immelt is a consummate salesman — and proud of it. As he said, “first and foremost my job is to sell jet engines, gas turbines and scanners. That’s my job.”

After an hour of listening to him, I felt a strong urge to buy a gas turbine myself, and I eavesdropped on several conversations about what a great senator or even president a post-G.E. Immelt would make.

But it is also because an open global economy in which everyone is getting richer and in which a reinvigorated United States has the confidence to win appeals both to American patriots and to American internationalists.

As with all dream scenarios, though, there is a catch or two. The first is that export-led growth is a terrific strategy — there’s a reason everyone is looking these days to Germany and China — but it only works if some countries are taking the opposite tack of building their economies around consumption. As Lawrence H. Summers, a former secretary of the Treasury, likes to point out, there are no Martians. The whole world can’t be German or Chinese — you also need some Americans and Greeks, and the long-term fate of those consumer nations isn’t so pretty.

The second, related catch is that, for all the talk of Team Germany and Team U.S.A., that’s only partly how the world economy works. Immelt is proudly and emphatically American — “I love the U.S., period” — but he told me that his successor might well come from the emerging markets. That’s no surprise: Smart businesses have figured out how to globalize. We don’t yet know if countries can do the same.

28 comments

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Great and intersting interview. One would think Mr. Immelt id dedicated to the “growth” of the economy. Why is it then that GE has laid off workers. He will be visited this weekend by Occupy Wall Street. Is is that OWS doesn’t understand that he is actually trying to help?

Posted by wendyvb | Report as abusive

Not everyone can be a mercantilist “all-in” at the same time. For every seller, there has to be a buyer. Add up net exports around the world, and they sum to zero, as they have to.

Immelt is outside his circle of competence here. In the mercantilist era, gold was bought dear with the proceeds from exports. Today the same process is happening with fiat US Dollars. Just as the mercantilists lost the first time, they will lose this time, from the US Dollar assets that will be worth a lot less than they paid for them in exports.

Posted by DavidMerkel | Report as abusive

Don’t you think that disfunctionality is the better approach. Blame unions (Tea Party-style). Blame globalization (Occupy Wall Street-style). Pass the buck (classic politician-style). That’s the way to succeed. None of this cr*p about working the problem.

Posted by Bob9999 | Report as abusive

Ms. Freeland, you have no earthly notion of what the Occupy movement is about. If you did, this meaningless pap about Immelt’s vision being “conventional wisdom” among the 99% would never have been written, as it is as ignorant a statement as I have read or heard recently, and that includes even Faux News.

Far from Immelt representing ANY ideals espoused by OWS, he is the very antithesis of what we seek. His zero-sum game and the platitudes of Hillary Clinton are precisely what is driving our nation and people over the cliff, and the global “competition” he refers to is nothing less than the extension of continued corruption, greed and exploitation that kills children and destroys lives all over the world.

Get your nose out of Immelt’s biz, and start thinking about what you write.

Posted by BowMtnSpirit | Report as abusive

And THIS is one of the main sources Obama is relying on for US job growth ideas?

By the way, for those who might have missed it, in another story on Bloomberg today, GE announced it had just posted an 18% increase in profits, “DRIVEN BY FOREIGN GROWTH.”

———————————————————————————–
GE profit up 18 percent, driven by foreign growth

Brazil, Russia and China drove General Electric Co profit up 18 percent in the third quarter despite sluggish economies in the United States and Western Europe.
The largest U.S. conglomerate said on Friday it expects earnings to rise at a double-digit percentage rate next year, following peer United Technologies Corp in trying to assuage investors’ fears about Europe’s brewing debt crisis.
“Our emerging market growth was very strong,” Chief Executive Jeff Immelt told investors on a conference call “It was a good quarter in a volatile environment.”
The world’s biggest maker of jet engines and electric turbines met Wall Street’s profit expectations despite weakening profit margins on its industrial products. Analysts said help from a lower-than-expected tax rate also boosted its results.
————————————————————————————-

As they say, “if you aren’t part of the solution, you must be part of the problem.” I wonder which of those Mr. Immelt might quality for?

Of course, Mr. Obama is not alone in this, merely the “point man” for wealthy BS like that being spewed out in the article above.

The fact of the matter is our entire government is in on this to one degree or another, and this is starting to look like a trip down the “rabbit hole” where nothing makes sense anymore.

What I can’t figure out is how the American people can be so incredibly “naive” (substitute your own word) as to believe all this BS for so long without doing something about it?

Why are we putting up with a government that has clearly lost touch with the needs of the vast majority of the American people, and has been doing so ever more egregiously for decades?

I know the Senate can impeach a president, but is there a way to impeach/recall our government?

If not, how about a quick constitutional amendment to make it more responsive and responsible for what it does?

Clearly, something needs to be done, since the present “safeguards” against usurpation of power are not working.

Posted by Gordon2352 | Report as abusive

The problem is that companies like GE that are clearly anti-American are not forced to pay dearly for being importers. It is ultimately better to be a consumption import nation, but you have to shift the Federal tax burden off of the consumers and onto the importers as much as possible.

Posted by M.C.McBride | Report as abusive

I agree Americans need to “fight harder,” but against their own wealthy class. The “main dish on the menu (would be) tough love,” served either French or Russian-style, and not their choice either.

Posted by Gordon2352 | Report as abusive

With due respect, this is a misguided mess.

First, you conflate the Tea Party with Occupy Wall Street. It’s true that both are, in their ways, and as you point out, populist. However, the Tea Party was started or soon financially taken over and promoted by Freedom Works, Fox, and other well funded Republican interests. And Tea Partiers skew to middle-aged and elderly white people of modest means with a fear of The Other. Occupy Wall Street, on the hand, to my knowledge, is not funded by liberal equivalents of the Koch Brothers, Freedom Works, and the rest. Nor does it get endless coverage on the liberal equivalent of Fox News. Nor is it hippies touting free love and drugs: it includes an awful lot of people of all ages and incomes and education levels. Plus it’s multi-racial.

Second, Immelt is truly clueless. He calls for US policy to be like Germany but fails to note that Germany, like most (all?) European countries has strong unions and work rules, free or near free education for all, extensive public infrastructure, and a robust safety net. Presumably they also tax extreme wealth at high rates to pay for most or all of these critical pieces of their economy. This disparity apparently totally went over your head (amazingly) as you don’t mention it.

Is Immelt saying the US should follow the same European path? That would be news to me and to most Americans. Instead he like Obama, Hillary Clinton, Bill Clinton, Bush, Reid, and the rest are pushing the same policies of de-taxation of extreme wealth, deregulation of Big Business, and suppression of wages. I don’t hear Obama talking about restoring tax rates on extreme wealth to the rates of 1945 to 1980 when the US economy did very well. No mention of restoring Glass Stegall or banning high frequency trading, derivatives, and naked shorts. Nor do I hear anyone talking about indexing the minimum wage to return it to the inflation-adjusted rate it should be, around $17 an hour. Oil and other business costs were allowed to rise with inflation since the 1970s; only wages were not.

We’ve seen this de-tax, deregulate, suppress wages movie for three decades with disastrous results. To cheer Immelt on is to cheer on more of the same. And to ensure Occupy Wall Street in some future form leads to an honest to God revolt, with riots in the street.

It is 100% impossible to create or sustain wealth without massive taxpayer-funded infrastructure spend and that, as the Europeans show, requires heavy taxation on extreme wealth. And it is profoundly inhumane that 45,000 people die a year for the “crime” of not being able to afford health care while billionaires pay little or no taxes. I speak having gone through a foreclosure and bankruptcy caused by neighbors having to dump their homes (lost jobs) which cratered our home price (we lost $150,000 having put 20% down and pre-paid our mortgage a little each month) then my business out west cratered with the economy and we had to move east with family and start over.

Apparently 4 million people have gone through foreclosure in the US. If each of them knows 5 people (family, friends, co-workers), that’s 100 million people with that experience of what it feels like. My guess is that maybe 1500 people have had the pleasure of breakfast with Mr. Immelt over the years. Which group do you think has a grasp on reality?

I’ve thought a lot about the reasons journalists like yourself and people like Immelt and politicians like Obama don’t appear to get what is going on in this country. Or propose the obvious solution of rolling back the Reagan era and restoring economic balance and fairness.

There are many reasons, of course, but perhaps one key is that your cohorts are not likely to be unemployed and, if you are, you’re likely to have enough money to not work (or have a spouse in that position). In 2009, I read a research report that broke down the unemployment rate by income groups. People earning six figures had an unemployment rate of 3% while people earning less than $50,000 a year had an rate of 20% plus. Oddly enough, I’ve yet to see this report updated. You’d think comparing unemployment to income would be an obvious idea for reporters to look into, wouldn’t you? Unless you’re a comfy reporter whose friends are people like Immelt or Bill Gates or Michael Dell. Then you might assume everyone in the US is like you and shares your economic situation. That someone dying for lack of money to pay for health care is a sad anomaly.

Which leads to my last point: chumminess. The US in the past decade has suffered from what you might call the Condi Rice syndrome. She’s a smart, well-educated person from a strong family. She appears to work very hard. Yet her education and apparent lack of street smarts led her to be completely incompetent with respect to identifying threats that led to 9/11. It didn’t fit her state-sponsored terrorism view of the world, among other reasons. And apparently she lacked (lacks?) the ability to question her assumptions.

We have been governed by a group of people who exhibit exactly these traits: presumably good people with great educations who prove to be incompetent. Our biggest banks, for example, were run into the ground, bankrupt. Yet their CEOs still have their jobs. I’d submit that having breakfast with Immelt and his BFFs also is part of the problem. Your role as a journalist is to stand apart, to question early and often, and to challenge your subjects. Not talk breathlessly about Immelt’s presidential chances.

We need a political and economic class and journalists who are from the real world. We need people who can succeed in spite of their terrific educations. We need journalists who question themselves early and often, then go out and challenge politicians and business leaders. Sadly I don’t see any of that dynamic in your column today. I appreciate your earlier reporting on the critical issue of wealth in the US. But this is not your A game. Instead, this column is Exhibit A for what’s wrong with this country.

Posted by FredFlintstone | Report as abusive

crown and coke

Posted by Shukla | Report as abusive

“We are not trying that hard,” Immelt said.

General Electric Co. Chairman and CEO Jeffrey R. Immelt’s 2010 compensation more than doubled to $15.2 million as the company benefited from a recovering economy. Immelt also received $389,809 in other compensation, almost all of it for his personal use of the company plane.

What do you mean with WE, Mr. Immelt ? There is no WE.

Posted by FBreughel1 | Report as abusive

Like economists, Immelt doesn’t understand the role of population density in driving down per capita consumption and the role that population density disparities (and, consequently, disparities in per capita consumption) play in global trade imbalances. Germany and Japan both have trade surpluses with China because both are much more densely populated than China. The U.S., on the other hand, is far less densely populated than all three, and has huge trade deficits with all three.

Trade deficits and the loss of manufacturing jobs are inescapable when attempting to trade freely with badly overpopulated nations. The only remedy is a tariff structure indexed to population density. Free trade and protectionist tariffs are merely two opposite ends of the trade policy spectrum and the blind application of one makes no more sense than the other. Each has its place. It’s time to make sensible use of both to assure a balance of trade.

Pete Murphy
Author, “Five Short Blasts”

Posted by Pete_Murphy | Report as abusive

Interesting. Comments are being removed from this piece. I guess Jeffrey and Hillary and Chrystia aren’t fond of dissenting views…

Posted by BowMtnSpirit | Report as abusive

Mr. Immelt and his ilk are seeking a restoration of feudalism in the world today. Amongst his recent brilliant choices was the dismissal of 10,000 US satellite manufacturing employees because he could (presumably) get their services cheaper in India. So the tax base of some US community is shattered, everyone is left holding the bag, except, of course, Mr. Immelt. I just googled “GE closes US plant” and there were 12,900,000 entries to choose from dating back to Mr. Immelt’s discovery that poor people in India will work for a fraction of the cost of Americans. Mr. Immelt is the grand czar of transnational proportions, more powerful than any sitting monarch and every elected official as well. Lets just admit our new “holy” world order and be done with it. I can live with it, as, like the domination of the Borg in Star trek, “resistance is futile” Its just rather stupid to champion Mr. Immelt’s vision as something other than neofeudalism.

Posted by raptureisajoke | Report as abusive

Globalization is not needed for America. Everything we need is right here at home. We have the energy, we have the technology, and once again when everybody gets back to work, we have the consumer purchasing power. Close the borders.

Posted by somethingstinks | Report as abusive

If you were a journalist, you would have either asked Immelt or noted for your readers that General Electric paid no US taxes in 2010 (http://abcnews.go.com/Politics/general- electric-paid-federal-taxes-2010/story?i d=13224558), despite their very obviously having done business in the U.S.

Were you so befuddled by his Eau de Power that your critical faculties deserted you? Did you forget how to ask an obvious and pertinent question?

Why, exactly, should I continue to read your writings, given how little you employ your access to inform your audience?

Posted by curiousparty | Report as abusive

Who precisely is “we”? Who is an “American”? I know I am an American when it is time to pay the check or time to cough up money for a cause someone else chose. I also know I am not an “American” when it comes to getting benefits or rights from the people who love passing me the check.

For over 90% of Americans, it is a lose – lose situation where your effort and talent have absolutely nothing to do with your loss. The system is impossible and it is intended to be impossible. The USA is in the hands of crooks. Get used to it. This interview is pure hokum.

Posted by txgadfly | Report as abusive

Finally someone said it . Pursuing export deals sometimes requires weekend travel, special product modifications, metric specifications , marketing in other languages, special pricing to penetrate . Its just too much work for US executives who have gotten fat on the US market.

Posted by bpmoscow | Report as abusive

Quotation A:

“The government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

Ronald Reagan (1911-2004), 40th President of the United
States

Quotation B:

“The ultimate determinant in the struggle now going on for the world will not be bombs and rockets but a test of wills and ideas-a trial of spiritual resolve: the values we hold, the beliefs we cherish and the ideals to which we are dedicated.”

Ronald Reagan (1911-2004), 40th President of the United States

Posted by ProfJMDosSantos | Report as abusive

The one person who doesn’t understand the US’ need to get involved and play harder is our own president. He is too busy trying to control economic events via the federal government to notice what is happening outside the boundaries of the US. And he is too busy calling business leaders mean and selfish to even grasp what they are up against.

Posted by AndyAE | Report as abusive

Is the “way of doing business” in Germany as opaque as it is in the US?

Posted by Alphonse81 | Report as abusive

This is crass BS. If Immelt is sincere he wouldn’t be traipsing all over the world seeking places where he can build factories and fill them with cheap labor. An export-driven economic recovery? What a bunch of garbage when these multinationals go elsewhere to manufacture their products. Get real. It all boils down to the fact the American worker will have to learn to get by on less BUT will the moguls and upper management go along with the NEW BIG PLAN? The NEW BIG PLAN calls for EVERYONE including Immelt to move forward on a tighter budget including a lower salary. This is what OWS is really about.

Posted by Alphonse81 | Report as abusive

While Immelt is at it he should voluntarily pay taxes on GE earnings instead of getting a free ride.

Posted by Quantum2 | Report as abusive

Quotation C:

“As I speak to you today, government censors somewhere are working furiously to erase my words from the records of history. But history itself has already condemned these tactics.”

Hillary Clinton (1947-), U.S. Secretary of State

Quotation D:

“I think that we have to be constantly asking ourselves, ‘How do we calculate the risk?’ And sometimes we don’t calculate it correctly; we either overstate it or understate it.”

Hillary Clinton (1947-), U.S. Secretary of State

Posted by ProfJMDosSantos | Report as abusive

The need for a ‘healthy debate’ and an ‘adult debate’ is absolutely necessary if America is to survive….

Posted by edgyinchina | Report as abusive

Emmelt has done very well in a global economy and boasts of its new middle class… not Americans. The countries that are expanding have tight government regulations and minimal human rights. Their success is at our loss because of GE and its counterparts wanting to succeed at all costs, including throwing its American middle class under the bus.

Cheap labor and suffering, condition that our child labor laws ended in American as a great human rights victory, simply do not exist where GE likes to go.

GE would have to give up profit to hire Americans again. They don’t love American enough for that! Not unless America gets a workforce of their world variety that can be exploited. If we don’t, what hope is there that we will compete at the export level?

Regulations in government means tough choices that will affect GE’s ‘global workforce’. Seems like this is a lot of talk, but I doubt GE will make the sacrifices needed to lobby support in America to regulate imports so our remaining consumers could get their jobs back on US land, thus saving our own middle class.

Look at India – which has always tightly regulated what can be imported to protect its workforce and citizens. Did it have a ripple of economic downturn in all this mess? NO

Posted by OliGo | Report as abusive

The ones that rule the planet definitely are not all that illuminated with sunshine.

But hey, at least you sound super educated book smart and have decent bank accounts.

Posted by solomons.abiff | Report as abusive

I would somewhat disagree with Mr Immelt and his views in this article. For many years there is little doubt that America’s way of doing business, backed by its allies the US Govt and the unforgiving dollar, has always been far more ruthless in its methods and in its outcomes. Add to this that Europeans workers get far more holidays than American workers and that Europe as well as Asia also have to work against The Dollar Advantage regarding the many benefits of being the world reserve currency.

Therefore the European or even the Asian way may be said to be, perhaps, more efficient in their own use of resources available.

Mr immelt insists that America must be “all in” in her business dealings. But this is not really a problem of business methods — but is, instead, both a political as well as a problem arising due to a complete non-appreciation of the global economic approach that hinders American business now. Both have terrible and untrustworthy global reputations, both need fixing and this is nowhere near happening in America yet.

In other words, Mr Immelt is just gassing irrelevant excuses. As well, Immelt and GE would have died a quick death long ago if GE hadn’t moved their manufacturing base to China/Asia. All this guff about the American business way is therefore claptrap because he has been using the Asian model so successfully for a while now — which is the main reason GE has been so successful in recent years.

Posted by slowsmile | Report as abusive

Is Immelt aware of the fact that Japan has a trade surplus with China and the U.S. and it’s current account balance is second only to China? This man needs a serious dose of Eamonn Fingleton, and so do you if you trust Immelt.

Posted by demand_sider | Report as abusive