In a talk at The Economic Club in Washington, D.C. yesterday covering a wide range of subjects about GE, manufacturing, jobs and competitiveness, GE’s Chairman and CEO Jeffrey Immelt said the economy in 2011 is “getting better” and there are “signs of growing strength every day.”
Among the positive signs is increased demand for products, robust deal activity and more optimism from corporate borrowers. “But it’s hard to take encouragements from all those signs if you’ve lost a job, if your mortgage is under water, and if your income opportunities seem stagnant compared to those that are better off,” he said. “The global economy really has been reset. And in this reset world we still do have opportunities to succeed beyond the achievements of previous generations. Business can lead the American renewal.”
Among the lessons learned in the past few years, he said, is that “we have to have a balanced economy built on both services and manufacturing;” we have to “export more, innovate more, and manufacture more;” and “we have to win in a new economic cycle where growth is happening at multiple speeds.” Those differing speeds can be seen in the rapid growth currently happening in Brazil and India even as much of the developed world is dealing with a sluggish rebound and fiscal constraints.
He pointed to GE’s continued investment in R&D and manufacturing and how that can also lead to job creation, noting that “in 2010 and 2011 GE will add 16,000 jobs in the U.S. comprised of manufacturing and high tech services. And we’ve worked shoulder by shoulder with our labor unions in an incredibly constructive way to make that happen.”
Regarding key focus areas that can help the US economy, Immelt cited the need to focus on strengthening small business, including improving financing vehicles so they can achieve more growth. He also stressed the need to encourage long-term prioritization of R&D spending, in both the public and private sector, so that leadership on technology is maintained.
He also addressed a number of recent media stories about company. “GE has taken criticism lately over our tax rate over the past two years. Like any American, we do like to keep our tax rate low. But we do it in a compliant way and there are no exceptions,” he said. “The reason why our tax rate was so low in 2009 and 2008, or 2009 and ’10 is simple. We lost $32 billion in GE Capital as a result of the global financial crisis. Our tax rate will be much higher in 2011 as GE Capital recovers. “
“But make no mistake. Business rarely speaks with one voice about anything. But we do on taxes. That’s because our system is old, complex, and uncompetitive. The purpose of the tax code should be that everyone pays their fair share, including GE. But it also should help to promote jobs and competitiveness — and it does the opposite today. “
In his conclusion, Immelt said, “We’ve come through a difficult time as a country but anger and cynicism doesn’t create jobs. Only optimists invest in the future. You know, over the past decade I’ve traveled the world extensively and met almost every CEO. And in every corner of the world business leaders believe in globalization but they also root for their own country. We can do the same here. And I certainly feel, in the case of GE and in the case of this country, we’re just beginning. You know, the future is going to be better than the past.”