GE & The New Jobs Tsar

http://economix.blogs.nytimes.com/2011/01/21/jeffrey-immelt-101/?nl=todaysheadlines&emc=tha2

http://www.nytimes.com/2011/01/22/business/economy/22obama.html?nl=todaysheadlines&emc=tha2

***************

"I love deadlines. I like the whooshing sound they make as they fly by." (Douglas Adams)

***************

For many, GE has been the U.S. economy over the last 40 years. Simply put, GE competes in so many sectors of the global business environment that they (as a company) represent how well the American business community is meeting those challenges.

The formal announcement yesterday in Schenectady, N.Y. by President Obama that Jeff Immelt (GE's CEO) will be Chairman of the President's Council on Jobs and Competitiveness was smart and politically savvy. Schenectady was the original home of GE and is currently where they make steam turbines. Part of the President's trip to India to encourage exports recently was a deal for GE to sell $750 million in steam turbines to Reliance Power Ltd. Jeff Immelt was with the President on that trip. Immelt was also with the President when he met with President Hu Jintao of China during their key export and trade discussions over the past few days.

GE recently announced a joint venture with the Aviation Industry Corporation of China, sharing technology for aircraft computers, communications, and cockpit displays from GE's aviation systems division. The fast-growing Chinese market for commercial airliners is expected to generate estimated sales worth up to $400 billion over the next 20 years. We see good news and bad news there. Currently, Boeing and Airbus are competing in that market. That's good and GE will be in there for engines and technology. But, eventually, China will be making it's own commercial jets based on GE's technology. Long term, where are Boeing, Airbus and GE?

The change in the "name" (see above) of the President's advisory board from the Economic Recovery Advisory Board was also politically savvy because the new title emphasizes "jobs."

The "Economix" post attached invites clicking to various references to GE and "jobs." One of those references points out that, "Like any company of a certain size, its (GE) focus is on efficiency and productivity not job creation. And, especially not job creation in high-cost labor markets like the United States:

*In 1980, GE employed 405,000 people.
*In 2,000, it employed 304,000 people.
*In 2005 (4 years into Immelt's tenure) the number was down to 307,000.
*Today it employs 304,000 people, of whom fewer than half are in the U.S."

Jeff Immelt told Fareed Zakaria during Zakaria's Top 500 CEO survey (2010) on why capital from key companies is not being spent at all and certainly not in the U.S. (that number is now over $2 trillion in cash), that he wanted more US government investment in R&D to help firms such as GE create jobs over the long term. The problem is that two of GE's three research centers are in Bangalore and Munich.

We like the change in title and emphasis of the President's Economic Advisory Board. We hope it works. It was good to see that GE has just reported a 51% increase in fourth quarter profit and its highest level of new orders since 2007. If, indeed, GE continues to be a good proxy for the U.S. economy, then things are looking up. And now for jobs...