Jeff Immelt on Dealing With Trump and Globalization
Since 2001, Jeff Immelt has shepherded General Electric through market tumult and political upheaval, as well as technological change. The chief executive officer of General Electric spoke with Bloomberg Editor-in-Chief John Micklethwait about Donald Trump’s agenda, the slowdown in globalization, and the digitalization of GE.
Trump has been very vocal about the behavior of American multinationals.
I think President Trump tweeting and calling people out—there’s nothing wrong with that. At the end of the day, each of us in our own way has to navigate our own companies through this world we live in. I just got back from a trip outside the United States, and I would say to our customers, “Look, you have to trust me and GE to be able to be good citizens in the U.S. and still support our business around the world.” We will figure that out. That’s my job.
And the travel ban?
I sent something out to all our employees. We have a lot of people who live outside the U.S., and they’re concerned. We said, “We understand the context, safety. But we think there’s maybe better ways to do it.” We’re not opposed to speaking out on that. Then the president sent out an executive order that said two regulations have to be canceled for every one that’s added. I’m all for that, right? So, too frequently, we’re sticking on all the negatives without standing back and saying, “There are some directions he’s going in that are going to be very good for business.” And we just have to navigate between the two.
Something like 62 percent of your workforce comes from outside the U.S. Don’t bans stand in your way?
From a business standpoint, we’re running the play the president has outlined. We’re a huge exporter. We’re a small importer. And therefore, I think it’s up to me to speak about how important it is that the U.S. has good relationships with our potential customers around the world. We have people on the ground that are Iraqis or Saudis. And they can help us with our local customers, provide that local face. Philosophically, we believe in trade, in the free flow of goods. Inherently, we don’t think things like walls are good ideas. At the same time, I would say that there’s nothing wrong with President Trump wanting to add manufacturing jobs in the United States. The president of China wants to add manufacturing jobs. The president of Mexico wants to add manufacturing jobs.
You have, I think, $1.4 billion in contracts with Iraq. Is that under threat?
That’s well-financed, well-structured. The teams are in place, and we’ve got a very strong local team in Iraq. Most of the products come from the United States. I think those projects will go forward. But again, we prefer a time period where you’ve got good communications, good contacts between our government and governments around the world, while understanding that security is still a challenge. If we want to create jobs in the United States, we need relationships around the world. That’s where businesspeople can communicate with the president to say, “Let’s have more friends.”
On regulation, some say rules and complications actually give an advantage to large companies.
Regulations do punish small business much more than big companies. We can hire as many lawyers as we need to, right? But it can be hard for a small company.
What would you like to see deregulated?
Let me start with taxes. You basically have an economy that is in what I would call an investment recession. Companies aren’t reinvesting in capital expenditures in the U.S. That’s been going on for a long time. Tax reform is one way to encourage the right behavior. Insofar as our tax policy is 30 or 40 years old, if we could get some improvement, it’s going to help GE, but it’s going to help everybody broadly to simplify the code. The ability to repatriate capital from around the world—just be like Germany or the U.K. or Japan. That would be great. That would be amazing. If the president can’t act on tax reform with a Republican Congress, that’s a big miss for where we are right now.
GE may be America’s most global company. Is the talk about tariffs affecting your trade outlook?
We’re a $22 billion exporter from the U.S. And we import $5 billion or $6 billion. We move stuff around the world. You know, there are two times in business when you really feel great. One is when everything’s perfect. Everybody loves each other, everybody gets along. And the other one is when everything’s in chaos, but you’re better than everybody else. We can navigate whatever system is put in front of us. But we would rather have the big trade deals.
Does globalization now seem to be going in reverse?
The essence of globalization had been changing long before Brexit and long before President Trump. The financial crisis, the role of China in the world—there’s probably four or five things that are really seismic changes that have led to this, this Bretton Woods version of globalization, breaking down into more of a multi-local world. People who see globalization from 30,000 feet in a think tank don’t know a damn thing about the way it really works. Today it’s country by country, deal by deal.
You actually have a role to play in this administration. You’re on Trump’s manufacturing council.
I was also on President Obama’s jobs council, right? Believe me, I didn’t agree with everything Obama said, either.
Now that you’ve experienced the joys of Brexit, you get the possibility of a Marine Le Pen win in France. Are you confident about the future of Europe?
Europe is oversold, in many ways. People have been so dark on Europe, because they need to differentiate. Some of the most productive workforces we have in the world are in Italy and France. We can export out of Europe all day long. We’ve never looked at Europe as Europe. We know the difference between France and Germany. When we were doing the Alstom [energy assets] deal in 2014, we were stopped in Paris by a set of decisions that basically violate Brussels’s rules. We were kind of sitting there, an American company sucking our thumb in Paris. We had to fight our way out of Paris. Then we had to fight our way out of Brussels. So we’ve learned how to manage paradox as a company. We’ve learned how to manage subtlety.
Can we talk about GE’s transformation? You make a lot of noise about software. Can you elaborate?
It wasn’t an initiative to be in the software business. It was more the recognition that our new jet engines have a couple hundred sensors on them providing this stream of data. We made the decision that we want to model that data on behalf of our customers and not relegate it to somebody else. That led us back into the chain of adding software talent, building a software platform. Our theory is that every industrial company is going to have to be a digital and software company. We wanted to lead that, and that’s how we’ve invested.
Is the management ethos still at the core of GE?
Management is key. You always have to be good at culture and leadership. But one of the things today is, nothing’s general anymore. When I first became CEO, we were in pet insurance, media. That’s too hard today. You’ve got to have this combination of depth and breadth. And you’ve got to have managers that are maybe more technical. Or else you can’t pick the right ideas. You can’t drive the kind of change that’s required.
How have you changed the company?
I think the company’s more technical. It’s more global. It’s more focused on the customer. Those are the main things. When I became CEO, we were 70 percent inside the United States. Now we’re 70 percent outside the U.S.
Does the prospect of the U.S. starting a trade dispute with China worry you?
It does. Not just in the GE context. There’s no good case for the two biggest economies on earth being in a trade war. A bilateral relationship is important—for the whole world. The Chinese are good. They have a worldview, just like we do. The president is smart enough to understand that having some kind of day-in-and-day-out relationship between the U.S. and China is critical. He’s going to see that.
If you look at Brexit, at Trump’s win, does it seem like the people most fed up with the world are the ones a global company like yours can help?
People didn’t feel the system was working for them, whether that was because of technology or wages. I’m not sure I can make everybody feel differently about globalization. What’s up to us is to navigate the system as it exists today but at the same time to say, “Look, if we want to create more jobs, we shouldn’t alienate everybody around the world.”