Comments from GE’s CEO
I saw this yesterday and it jumped out at me, from a FORTUNE magazine interview with Proctor & Gamble’s CEO, A.G. Lafley and GE’s Jeff Immelt:
“A.G., your company employs more people outside the U.S. than in it and has for a long time. Jeff, at GE it’s about fifty-fifty, and you’ve said you make major appliances in Louisville but can’t make a dime of profit doing it. Can American workers compete and raise their living standard in a global economy?
Immelt: It’s all about innovation and technology. Look at jet engines. We spend $1 billion here on R&D. We have a dominant competitive position. Our workers are very highly paid and highly skilled, and we can export from Boston or Cincinnati to the rest of the world; 80 percent of our orders come from outside the U.S. We can go toe to toe with anybody, and we’ll be able to do that for a long time.
Appliances – we can’t do that. Our high-end appliances are now made in China and Mexico. Our responsibility – and again I learned this from Jack [Welch] – is not to throw a bomb in the middle of the place. But every year we’ll shut down a line. We’ll get 80 percent, 90 percent of the people to retirement and pay to retrain the others, and we’ll have a thriving business as we do it. It doesn’t do any good to be dishonest with people. We’re not going to put big investments in Louisville just to lose money.”
Is Immelt speaking out of both sides of his mouth? Clearly, GE has gone down the outsourcing/offshoring path. But, GE is also supposedly embracing lean, or at least a GE version of lean.
Immelt says, on the one hand, they can be competitive (in certain products, like jet engines) and ship from the U.S., but on the other hand he claims they can’t make a dime manufacturing appliances in Kentucky. Would lean change this equation? Is GE even trying?
To say it’s all about innovation and technology…. isn’t it all about people? Isn’t that how Toyota views the challenge, to develop people? Is GE embracing the “Thinking Production System” or just looking to cut costs and to make excuses?