Posting in Design
Jeff Immelt wants to be a hero. He has bet his company on making America great again. It's a bet more American business executives need to make.
Most corporate chieftains are either failed, failing, or considered to be greedy villains.
So as the year prepares to close let me offer an exception, someone you can actually look up to.
Immelt took command of the Dow 30's last original member in the year 2000. He succeeded Jack Welch, who had made himself legendary by turning GE into a financial powerhouse.
Immelt has spent the decade tearing down the house that Jack built.
It hasn't been easy.
The company's finance arm, GE Capital, was too big and (for most of the decade) too profitable to get rid of. Immelt was caught out like everyone else when the crisis hit, sustaining $7.2 billion in losses during 2008. Last December it even tapped the TARP program to the tune of $3.5 billion.
What makes Immelt heroic is that, while other executives were betting on finance, on imports from China or on real estate, he has bet his company on America. That may be an extraordinary claim. But here is some extraordinary proof:
- Immelt is designing lower-cost products that sell in emerging markets. Its sales to China were up 25% this year.
- Immelt has focused the company on industrial markets, on making things.
- Immelt is hiring Americans to work on big problems like transportation, health care, and energy.
Perhaps the best Clue as to what he's up to was his recent decision to sell a controlling interest in NBC Universal to Comcast. The deal will bring GE $13.75 billion, enough to absorb the financing arm's losses and keep moving in industrial markets.
Immelt has his critics, and for good reason. GE is worth two-thirds less than it was 10 years ago. But it's still standing, which is more than you could have said if it remained primarily a financial company following the dot-bomb and the financial meltdown.
Evan Newmark of The Wall Street Journal accuses Immelt of "hitching GE to the Obama Administration." The Free Enterprise Action Fund, which supports brown (as opposed to green) investment, is sour on GE and Immelt.
In a speech last week at West Point, Immelt gave the proverbial poke in the eye to those critics. He talked about innovation, manufacturing and exports. He said there is nothing "inevitable" about the nation's manufacturing decline:
I have taken on the challenge to increase manufacturing jobs in the United States. These are the jobs that have created the midwestern middle class for generations. Manufacturing jobs paid for college educations, including mine. They have been cut in half over the past two decades.
Many say this is a fool’s mission. I don’t have all the answers. What I can bring … what GE can bring … are investments, training and operating approaches to help everyone win.
Heroes don't follow the crowd. They match action to words. They care about others, not just themselves. They see the bigger bottom lines.
By those standards Jeff Immelt wants to be a hero. He has bet his company on making America great again. It's a bet more American business executives need to make.
Dec 13, 2009
It is refreshing to read about a CEO trying to focus on Americans to be more than consumers of the company's products. I wish him good luck in bucking the trend to offshore manufacturing and support.
The company has lost 2/3rds it value, most of which was lost long before the banking problems of last year. More stockholders have been hurt than helped since he took over so I would call that a fail. He could have sold GE Capital at any time before 2007, however besides profit, GE Cap's benefit is that it helped sell GE products. Run well there would have been no need to sell it. GE Capital made money on its own until 2008 when it continued to be profitable with the help of TARP. So why did GE Capital need TARP? GE Capital isn't a bank but so its not like they are regulated like the banks. However they did join FDIC just in time to receive TARP funds. How many mortgages were saved by $3.5 billion in TARP? How many depositers? Why did they have losses? Did they lower their credit standards such that they made loans to people that couldn't pay them back? They aren't regulated by the government so they don't have the banks excuse they congress forced them to make cheap housing loans. Through subsidiaries GE continued to sell aircraft parts to Iran even though it was illegal. That doesn't sound heroic, it's more like greedy and possibly criminal. Additionally he used his influence over NBC as a shield against criticism as well as to push a political agenda. Is that heroic? No but it did allow him to get TARP money which at least helped his stockholders.