For its 2016 Annual Report, GE‘s CEO Jeff Immelt wrote a letter to shareholders that attempts to weave together the core philosophy of GE, its vision for the future, and the way in which both are interacting with current political and economic climates. His letter speaks not only the language of business, but also the language of workers and provides some fascinating insight into the way in which GE sees itself participating in the global economy and how that strength will continue in light of a wide variety of speculations about what direction the US will take in terms of economic policy.
It should come as no surprise that such a letter paints GE in a victorious light – you could play a drinking game based on each time Immelt says the word “win” or some variant – but it does so while still conveying a significant amount of meaning. This is no corporate-speak, empty phrased epistle to confuse and soothe and it offers a concise view into the tempest-tossed sea of current America. Clearly, there’s no room for true fear or despair in a letter to shareholders and even a car accident could be reframed as a “sudden cessation in a nonrecurring ambulatory individual/machine amalgamation” but actually, there is very little in that tone and instead, an interesting perspective by a person. One that could be easily disagreed with, which means that it includes actual statements and not simple vagaries.
The current administration has ridden to power on, among other things, the idea that America is losing in the global economy. Setting aside the readily fabricated proof offered by the administration, there is a very real feeling by many Americans that there is not only a lack of employment opportunities, but also a dearth of possibilities for rising above a simply everyday economic struggle. Sending jobs overseas takes its fair share of the blame and companies, current President’s included, have undoubtedly taken advantage of lower costs of production elsewhere.
However, in today’s economy, it’s no longer a matter of simply throwing more man-power at a problem; instead the solutions come in the forms of what Immelt terms the “Industrial Internet” and additive manufacturing. Being aggressive in adopting and adapting in these two arenas are part of what has created GE as a global leader in the economy, driving the creation of opportunity, instead of operating as an economic scavenger picking up pieces as it finds them. In this, Immelt addresses the popularly held misconception that the rise of technology ultimately and inevitably leads to the loss of on-the-ground jobs and consolidation of wealth only in the hands of a few power brokers.
Immelt doesn’t believe that a business’ economic stresses should or can be relieved through something as simple as replacing higher-cost workers with lower-cost ones. Instead, in his letter, he describes spreading rather than outsourcing as beneficial to workers at home and abroad. He speaks of the beneficial trade-off in which there are not insignificant numbers of foreign workers employed by GE but instead of there being a one American job lost to one foreign job gained ratio, the strength of the company’s global footprint actually creates a loop in which new jobs are created at home. Tomorrow’s economy is less about reducing costs through outsourcing and more focused on the creation of business relationships with fast growing economies, as he explained:
“Outsourcing is yesterday’s game. During the ’80s and ’90s, business looked to the emerging markets as a cheap labor source. Some American jobs migrated to countries that welcome US companies with open arms. Some American workers lost in the game of wage arbitrage. Today, our globalization is driven by a desire to access fast-growing global markets…Because we are a real and regular presence in diverse markets, when we win globally, we benefit the US as well.”
This expansive global footprint means that Immelt believes GE is not beholden to, or even particularly benefited by, free trade deals. Companies such as GE that are already operating multi-nationally have the capacity of operating in and out of countries as benefits them; they are not reliant on the US government’s ability to open the door for them. However, while the US government isn’t needed for hand holding for GE, there is still a great deal they could do to, at the very least, get out of the way of progress, and at the very best to help support newer or smaller businesses to thrive. Shifting focus from free trade deals to the modernization of global institutions, such as the Export-Import Bank.
“We believe that digital investment in industry can help solve the productivity challenge. The Industrial Internet and additive manufacturing are two emerging technologies that create new entitlements for productivity. GE chooses to lead in both fields. But why? We could always sit back and let others create the market, relegating our role to consumer and not as leader,” Immelt wrote.
“GE has the most intellectual property and the best capability in both innovations. We are a huge practitioner, and our customers have a thirst for productivity. We have the most to gain by building the Industrial Internet and additive manufacturing and the most to lose by giving it to others. Your company is building new businesses that generate productivity for GE, our customers, and the world.”
In his letter, Immelt tries to walk the line between voicing support for potentially trade friendly administration and the fears that are felt internationally as this administration calls for economic nationalism. Isolating the US from global trade will not bring American jobs back; what is necessary instead is to create a stronger workforce ready to accept employment as it has been reshaped by technological and intellectual advances. He calls on American businesses to not be so firmly directed toward the minimum by governments, but rather reach out and invest on their own, specifically to invest more in the American worker.
To look at one example, in October there were a reported 322,000 manufacturing job openings, but only 271,000 were filled. This is not due to laziness on the part of the worker, or the single-minded desire to outsource jobs, but rather a mismatch between potential employee and the needs of the employer. Immelt advocates that some of the burden should be placed on American companies to invest, rather than simply complaining when governmental systems do not do enough to prepare the workers they seek.
“Many fears of the American workforce are created by a lack of competitiveness,” Immelt wrote. “We cannot merely blame a dysfunctional government. While tax reform can help, it is unlikely to be the only answer. American business needs to invest more. Over the past years, capital investment has declined substantially. Outsourcing, purely to achieve lower wages, is too easy. The massive industry consolidations that we see today haven’t helped, because they have choked off innovation and reduced investments in a competitive workforce.”
In other words, we’re all in this together; what is good for the goose is good for the gander. The letter is brief, and therefore offers an incomplete picture, and the idea of exactly who the global elite are is ill-defined at best, but the tone of the letter is interesting and one worth studying: more responsibility for companies to invest and more opportunity for workers to work. It’s not a solution, but it’s an interesting place to start. Discuss in the GE forum at 3DPB.com.