Viewpoint -- Memo To Jack Welch

Dec. 21, 2004
Celebrating won't sustain a recovery.

Guess what, Jack? There may be an economic recovery underway, but your recent condemnation of media reporting on earnings reports and your call for celebrating "damn good news" (Wall Street Journal, Oct. 30, 2003, Page A15) will not sustain the increase in GDP growth. First of all, Jack, the media are not -- nor should they be -- cheerleaders. In their reporting, the media should focus on neither silver nor dingy gray linings, but describe clouds, if they exist, exactly as they are. You can do the cheerleading -- and indeed you do so in your op-ed piece. My second point, Jack, is that good feelings will drive company productivity and consumer confidence only so far. In the absence of active demand for goods and services and the means to pay for them -- and that means jobs -- the recovery cannot continue to advance. You write about America's need to get competitive again but contend that can't happen if "we . . . indiscriminately put a negative spin on what is legitimately good news." Jack, where is the sweeping non-competitiveness you see? You seem to be recalling the U.S. of the '60s and '80s in the last century, not the U.S. in the opening years of the 21st Century. To be sure, there are concerns about China, India and an enlarged European Union as competitors. And there is a legitimate discussion going on about whether it is better to focus on "high-tech" and "advanced" manufacturing industries or concentrate on upgrading worker skills. There is urgency to such actions. The pace of change, which you influenced greatly and positively while leading General Electric Co. for 20 years, continues to accelerate as economies mature around the world, as traditional political boundaries are blurred, and as consumers, better-informed than ever before as a result of the growth of information technology, make more sophisticated choices. But, Jack, the pace of change won't be stopped by some negative spin, whatever its source. In your opinion piece, Jack, you write in Churchillian tones that, "The facts are, companies are not bricks and mortar, but people, with blood and sweat and tears." That's true to an increasing extent. Companies are people with blood and sweat and tears -- and ideas. Whether companies call the latter intellectual capital or not, they ignore it at the risk of their very survival. But Jack, there are millions of Americans who do not hold jobs today, nearly 3 million in manufacturing alone, not because of negative spin but because companies, including the one you once headed, have laid off workers and eliminated lines of business in reaction to altered market demand. Ignoring those facts would be irresponsible journalism--and bad business. In journalism, ignoring those facts would be to tell only part of the story of recovery. In business, ignoring those facts would blind executives to the need now to grow revenues as well as to continue to control costs. The height and breadth of the U.S. recovery from the 2001 recession will be determined by companies paying attention to the fundamentals of cost, demand and the competitiveness that comes from finding better ways to continue to employ throughout the economy people who are constantly encouraged to contribute the better ideas and best practices. Those that do will get plenty of good press. John S. McClenahen is an IndustryWeek senior editor. He is based in Washington, D.C.

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