Immelt Defends GE's Investments in Emerging Markets

Sept. 22, 2011
In a CNN interview, the GE chairman promised an 'action-oriented jobs plan' and praised 'the pure productivity' of the American worker.

GE is hiring 15,000 people in the United States this year, through investments such as a new locomotive factory in Fort Worth, Texas, and a new aviation-composites facility in Ellisville, Miss., GE Chairman and CEO Jeffrey Immelt said in a recent CNN interview.

In a wide-ranging discussion on Sunday with CNN's Fareed Zakaria, Immelt defended GE's growth and investments in China, India, Brazil and other emerging markets, noting that 60% of GE's business and 70% of its backlog comes from outside the United States.

"... My customers are in Brazil, my customers are in Canada, my customers are in Japan and China," Immelt told Zakaria.

GE's booming international business makes the company the second-largest exporter in the United States, which Immelt said is a cause for celebration because it helps create jobs here.

Immelt also fired back at criticism of GE's federal income-tax rate in 2010.

"We paid billions of taxes over the last decade," Immelt said. "We wrote off massive amounts during the financial crisis in GE Capital, and our tax rate to date this year is over 40%."

He discussed the larger issue of corporate tax reform, calling for an overhaul of the system that would lower the rate while also closing loopholes, noting that he agrees with the recommendations on corporate tax reform made by the bipartisan Simpson-Bowles Commission.

Among other issues that Immelt discussed in the interview:

Shoring up Demand is Key

Immelt said "certainty of demand" is required to spur hiring. He cited GE's aviation business making jet engines, in which high market share and strong global demand mean that GE's factories in the United States are operating at full capacity and adding workers.

"Now, 80% of those products go outside the United States. They go to the Middle East, to China, to India."

Simplifying Business Regulations

Immelt said he has learned from his service as chairman of President Obama's Council on Jobs and Competitiveness to appreciate how the world looks "through the eyes of small business."

He pointed out that big companies such as GE are able to more easily comply with burdensome regulations because they have more people and resources. He said the council and its 26 members have convinced the Obama administration to conduct an agency-by-agency review of regulations in an effort to simplify ones that are overly burdensome to small business.

Investing in American Competitiveness

While Immelt asserted that the government desperately needs to take measures to reduce its debt, he said it can play a key role in reviving the economy.

"Is government too big in many ways? Absolutely. But does the country still need to invest in education? Does the country still need to invest in infrastructure ... and in the types of innovation and R&D that are going to make [the United States] competitive in the 21st century? Yes, we do."

Immelt said the "government in the U.S. has always been a catalyst to drive growth."

"This is not President Obama versus President Bush," Immelt said. "The [National Institute of Health] has been a catalyst for the world's best health care system. The Defense Department spawned ... the Internet and modern transportation technology for generations. The nuclear industry was built [by] the Defense Department."

Investing in Education and Worker Retraining

Immelt noted that there are 400,000 unfilled health care jobs in the United States for radiology technicians and other health care support positions.

"We need to have a way to get construction workers who have the highest level of unemployment to go from being a construction worker to being a radiology tech in a year," he said.

Immelt noted that community colleges and other schools could take a lead in offering retraining programs.

Immelt also emphasized the importance of science education, saying the United States should create 10,000 more engineers every year to stay competitive with students in emerging economies.

The Importance of Infrastructure

Immelt called infrastructure "a facilitator of competitiveness and productivity ... whether it's broadband or highways or ports or electricity grids."

"Businesses consider an area's transportation system when they're deciding where to set up shop, whether it's a high-tech manufacturing plant or a corporate headquarters," he said.

A quick way to create jobs, Immelt asserted, would be to cut the permitting cycle for big infrastructure projects in half.

The Council's Upcoming Jobs Plan

Immelt said the Council on Jobs and Competitiveness is crafting "a very specific, very tangible, very action-oriented jobs plan."

By the end of the year, Immelt pointed out, the council will release a sector-by-sector jobs plan focused on nonpartisan solutions.

He said the plan will focus on areas he had discussed: ideas in education and retraining; trimming bureaucracy and simplifying government regulations, especially ones that burden small businesses; and investing in infrastructure projects.

Immelt also asserted that businesses believe in the American worker, noting that recent trend toward onshoring is the result of the "pure productivity of the [American] worker," which is "three times higher" than that of some overseas workers.

He ended by reflecting on the difficult climate in the United States, created by anger and frustration stemming from the economy.

"But ultimately there's a sense of teamwork that's very much a part of the American culture. There's a sense of partnership that I think will ultimately play out."

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