Guest Columns

EXCERPTS FROM REMARKS BY JEFFREY IMMELT, CEO OF GE TO THE CENTER FOR ECONOMIC GROWTH IN ALBANY
Jeffrey Immelt, chairman and CEO of GE, spoke to about 100 business executives in July at an event sponsored by the Center for Economic Growth, a regional economic development entity. Here are excerpts of his remarks. On GE's commitment to the Capital Region: Weve got more than 7,000 employees in the Capital Region today and probably close to 15,000 retirees. Since 2009, weve invested a couple hundred million bucks and announced almost 2,000 jobs. The announcement we made today was really taking a product from our Research Center, in energy storage, which I think is going to be a massive market. This has been developed in our labs for a long time. Were commercializing it, manufacturing it. Its . . . one of those industries where you can fill the factories up pretty quickly. So we see lots of good prospects from a customer standpoint, and I think we can scale this plant substantially over the next couple of years. . . . On the global economy: . . . More than 60% of our revenues are outside the United States today. I became CEO maybe a decade ago. We were 70% America, 30% outside the United States. Just in 10 years were now 65% outside the United States, 35% inside the US. So just thats the way the global economy has gone over the last decade. On finding opportunities in the current economy: . . . Were in a cycle that might last . . . longer than any of you might hope. . . . We still see, as a company, see a lot of opportunities for investment and growth. . . . . . . . This is going to be a race for the competitive, for the innovative, for the people that have financial strength, the people willing to invest, the people that are willing to take risk. Five things that make America work: 1. Dedication to innovation, science, and technology. The only sustainable competitive advantage through the generations for a company or a county is in its technology base. As we learn that as a company, we spend more in R&D. In the United States. . . spending 2% of our GDP in research is probably not enough. This ultimately is going to be a race for who has the most engineers, whos got the best entrepreneurial spirit. . . . No country I go to necessarily wants expertise in financial services. They all want factories. . . new ideas. . . new technologies. . . new innovations. This focus on technology, and innovation, and engineering and science is totally where the futures going to be. [GE this year will] launch more than 900 new products, more than any other year in our history. A decade ago that was 200. . . . Focus on innovation, technology, science is . . . the strength of GE. I think thats got to be the strength of the US. 2. Manufacturing If you go back 25 years, labor was expensive. Material was cheap. Today. . . materials are more expensive. Labor is more competitive. In Louisville, Kentucky, we make appliances. This is by far the most competitive industry we are in. We can make a refrigerator with two hours of labor, using lean manufacturing. When you can make a refrigerator with two hours of labor, you can make it in Louisville, Indiana, or New York. Its more competitive than making it in China or Mexico. When youre advancing material science, when youre advancing manufacturing methods, where you make things has more to do with where the markets are than necessarily any chase for labor. I think thats yesterdays strategy, not tomorrows strategy. Tomorrow is about productivity, speed, efficiency, and markets. 3. The power of the industrial Internet For any jet engine we have flying in the GE fleet, we take 90,000 parameters of information every year. We can track the heat of the engine and the temperature of the material. If we can get one percentage point improvement in the installed base of fuel performance of all the engines in the world, thats worth three billion dollars for our customers. . . . its all about [data and analytics]. So were investing a lot, both at the Research Center and around the company, in software, analytics, modeling. We think its a great place to work with small companies. Its a great place to evolve in the future. 4. Globalization In our gas turbine business. . . we're number one in the world with almost 50% market share. We will sell more gas turbines this year in Nigeria than we will in the United States. Okay, not because were losing market share in the United States, but because . . . . that's where the market is. The ability to unleash in 140 countries around the world, and the ability to do that competitively has got to be the destiny of how we look at ourselves when we look at ourselves in the mirror. . . . Theres going to be a billion new consumers between now and 2020 not living here. Theres going to be three billion new consumers in the middle class between now and 2030 not living here. We just need to have the selfconfidence that we can go sell our products to those folks, and thats going to be the way that we can lower unemployment over time. Its going to be by accessing those markets. So dont give up on globalization. Its incredibly important. 5. The vibrancy of the energy sector . . . . [GE] can be in gas turbines. We can be in nuclear. We can be in wind. We can be in solar. We can be in energy storage. . . . When you do a lot of things you dont have to be so smart about how the world goes. Things are going to go in and out of favor, but dont be mistaken about a couple of things. First, the energy industry is an incredibly fertile place to invest. Its going to go through a lot of change as time goes on. The second thing I would give you with great certainty is if we put our mind to it as a country, the United States could achieve energy security, energy competitiveness in the next decade. . . . Any other country in the world. . . would be partying in the streets about how many natural resources we have. . . . [The Capital Region should] own energy. Be a region that can be about energy. On creating jobs . . . . Think about the micro and not the macro. Too often people want to talk about jobs in a conceptual way. Thats not how people get hired. People get hired job by job by job. So the one thing we learned is the importance of understanding each micro-region, where the jobs are going to be created, and how do you get people from high school to that job in the most effective, most efficient way, and not waste time doing things other than that. I think this notion of getting people trained and ready to do the jobs that are available in your region is absolutely critical. On nurturing small businesses . . . . We burden small business with the same structure that we burden big businesses with. We make it too hard for small businesses to form. We make small businesses lives too hard. They are an important job creator in the United States. Theyre not the only job creator, but theyre an important one. Weve got to find a way, and the formation of new business coming out of this crisis is the lowest in history. So weve got to find ways to nurture and develop small businesses. On sensible regulations . . . Why should it take 12 years to get an interstate transmission and distribution line permitted? . . . . There are literally hundreds of thousands of jobs that are trapped in slowness, bureaucracy, intolerable lack of speed and sense of urgency around permitting cycle time. I think thats what we can attack. I think thats what Governor Cuomo has tried to attack. Thats what other governors have tried to attack. . . . [GE] put a lot of facilities in the last four or five years . . . around universities in Mississippi. Theres a reason. They made it easy. . . . Why does New York need to have a reputation of being anti-business? Thats not what we want. We want to be pro-business. The ways the guys like me look at are you pro-business is do you have a sense of urgency. You know, can you get things done? Can you get them done quickly?

For Jeffrey Immelts full remarks click here.

Page 2