Obama Asks GE's Immelt to Head Economic Advisory Panel, Replacing Volcker
In announcing Immelt’s appointment to take the helm of the newly renamed President’s Council on Jobs and Competitiveness, Obama said the economy is “in a different place” from where it was during the financial crisis when Volcker was brought on, and new ideas are needed to keep the momentum going.
“The past two years was about moving our economy back from the brink,” Obama said alongside Immelt during an event in Schenectady, New York, home to the birthplace of GE’s energy business. “Our job now is putting our economy into overdrive.”
He said Immelt “understands what it takes for America to compete in the global economy.”
As head of the world’s biggest maker of jet engines, medical-imaging equipment and power-plant turbines, Immelt gives the White House a corporate heavyweight to help burnish Obama’s pro-business credentials. Immelt, 54, GE’s CEO since 2001, is an original member of the panel, which was formed as the President’s Economic Recovery Advisory Board in February 2009.
In Schenectady, Immelt said while more than half of GE’s revenue comes from outside the U.S., he wants to ensure that “this is the most competitive country in the world.”
GE had 304,000 employees at the end of 2009, down from 310,000 at the end of 2001. About 134,000 were based in the U.S.
Even as some executives and the Chamber of Commerce have criticized Obama, GE’s chief has sounded many of the administration’s themes: boosting jobs through exports, ensuring companies can compete with China and India, and jumpstarting a clean-energy economy.
“It’s the right aspiration,” Immelt said of the president’s goal of doubling American exports to more than $2 trillion in five years, during a Nov. 6 interview in Mumbai, where he joined Obama for a meeting with business leaders. “We’ve done it in the last five years as a company.”
Still, Immelt and GE have clashed with the administration on some fronts, including funding for the company’s alternative engine for Lockheed Martin Corp.’s Joint Strike Fighter and some aspects of the financial regulatory overhaul.
The administration today reiterated its opposition to the jet engine program. “The secretary of defense, the president have made the point that this is not something that we need,” White House press secretary Robert Gibbs told reporters aboard Air Force One en route to Schenectady.
GE, which reported results today, climbed after fourth- quarter profit growth topped analysts’ estimates, industrial equipment orders rose and sales increased for the first time in two years. Shares rose $1.31, or 7.1 percent, to $19.74, the highest close since November 2008.
On a conference call with investors to discuss the results, Immelt said his commitment to the company won’t change with his new role on the council. “My leadership at GE, that doesn’t change,” he said.
The council plans to meet quarterly with Obama and is supported by Treasury staff, spokeswoman Deirdre Latour said. Gibbs said Obama will “meet probably more regularly with the new group.”
Reshaping the Company
Immelt has reshaped his company, selling units such as plastics and bond insurance while expanding energy, health care, transportation and jet engines.
Last year, GE’s stock outpaced the Standard & Poor’s 500 Index for the first time since 2004 after lagging amid asset sales and investor concern about the GE Capital finance unit. The shares fell 55 percent from Aug. 31, 2001, just before Immelt took over from Jack Welch, to the end of 2010. That compares with an 11 percent rise in the S&P 500.
The advisory panel that he will head was originally meant to bring together business executives and other experts to advise Obama on combating the worst recession in seven decades.
The panel’s start-up was delayed, and Volcker, known for taming inflation as Fed chairman in the 1980s, told colleagues he sometimes felt it was more of a public relations tool for the White House, according to a person familiar with his views.
He did advise the administration on the rewriting of financial laws, however. And the Volcker rule -- which banned proprietary trading at banks and restricted their investments in private-equity and hedge funds -- was named after him. Volcker, 83, had agreed to serve only for two years as head of the board and plans to be available to advise the administration, according to another person familiar with the matter.
Relying on Volcker
“I have relied on Paul Volcker’s counsel as we worked to recover from the worst economic crisis since the Great Depression,” Obama said in a statement. “I have valued his friendship and skill over the years, and I will rely on his counsel for years to come.”
Members of the existing advisory board include Robert Wolf, head of UBS AG’s Americas unit, Jim Owens, former chairman of Caterpillar Inc., and Richard Trumka, president of the AFL-CIO labor union federation.
Immelt, a self-described Republican, has emerged as one of Obama’s most visible outside economic advisers. In addition to the summit in India, he was among the executives who met with Obama and Chinese President Hu Jintao this week and later attended the state dinner honoring the Asian leader.
GE, which received regulatory approval for the sale of a majority stake in its NBC Universal unit to Comcast Corp. this week, has also made its presence known in Washington through lobbying: It spent $39.3 million in 2010, more than any other company, new Senate filings show.
Immelt’s relationship with Obama wasn’t always close. During the 2008 campaign, he donated $2,300 to Obama’s Democratic primary challenger, Hillary Clinton, and $2,300 to the Republican presidential nominee, Senator John McCain of Arizona, according to the Center for Responsive Politics.
Yet in recent months, Immelt has championed some administration goals against criticism.
He described as “real positives” Obama’s agreement to extend Bush-era tax cuts and “the tone of just being open to work with business.”
While Obama has come in for criticism from some business groups, U.S. corporate profits in the third quarter of 2010 exceeded the 2006 high reached before the recession. Optimism about the economy among CEOs of the largest companies rose in the fourth quarter to the highest level since the start of 2006, according to a Business Roundtable survey.
While the S&P 500 has risen more than 50 percent since Obama took office, the country is dealing with the longest stretch of unemployment rates above 9 percent since monthly records began in 1948.
GE has announced 6,500 new U.S. manufacturing jobs and retained more than 8,700 permanent and temporary positions across its manufacturing units in the past two years.
Many of the jobs are tied to Immelt’s export push. GE this week announced joint ventures and orders for Chinese rail, aviation and energy projects that may yield $2.1 billion in sales, creating or retaining about 5,000 jobs.