GE exec explains effects of globalization on United States

Jennifer Shubinski

Wednesday, Jan. 21, 2004 | 11:01 a.m.

The chief executive of General Electric Co. gave a pep talk to the home building industry Tuesday, promoted growth at his company and encouraged executives to think about change and the affect globalization has on business.

Jeff Immelt, chairman of the board and chief executive of GE, was the keynote speaker at the TecHomExpo, a technology show within the massive International Builders' Show in Las Vegas this week.

Immelt called on businesses to be innovative about business and bullish on technology to stay competitive in a growing, global marketplace.

"It's always better to change before you have to change," he said to a packed room of home building industry leaders.

Immelt noted growth in Europe, Japan and China and said that presents challenges, as well as opportunities, for U.S. businesses.

"What's different this time around about globalization, (is) it's not so much about cheap labor, it's about access to technology; and the fact is that today you can hire probably two or three engineers in a place like China for what one production worker might get paid in a place like Louisville, Ky.," he said.

Many U.S. companies, including GE, have made headlines lately because they have been shipping call center jobs, IT professionals, and backroom operations overseas.

Immelt, who declined to be interviewed after his speech, told the audience he didn't talk about globalization to scare them.

"We need to be more innovative and creative in this country to create jobs," he said. "We need to continue to focus on innovation to make this country continue to be competitive."

The outsourcing of jobs to overseas locations could hurt the Las Vegas Valley, Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, said after Immelt's talk.

Not because jobs from Las Vegas will be moved, but because those jobs may never arrive here.

"It might cut into opportunities for diversification because now we are competing not just in the United States but throughout the world," he said.

He said increased globalization means quicker, or bigger, impacts on markets elsewhere when something goes right -- or wrong.

"We do see a bit of that right now in some of the most recent data in lumber prices as it relates to Canada," Schwer said. "World globalization changes the prices of raw materials."

Immelt encouraged business leaders to visit countries such as China and India to get a sense of the global marketplace and its affect of business.

"You have to understand globalization and make it work for you," he said.

Immelt said companies must focus on growth and how it can continue to grow in the future to stay competitive.

He said GE, the world's largest company by market value, invests 15 percent to 20 percent more money each year on new products and ideas.

"Every year we have to think of new ways to be more competitive," he said. "Technology and innovation are tied to future profitability."

Immelt sited GE's security business is an example of that innovation and technology.

He said the security business will experience "unstoppable growth over the next few years."

He said there is a deep market for security products because of the large number of new homes and offices being built nationwide.

Immelt said insurance companies will start demanding that security systems be installed in homes and businesses.

"It's the times we live in," he said.

When GE entered the security market about five years ago, Immelt said it was fragmented. But since that time, and after the terrorist attacks of Sept. 11, 2001, the industry has changed and evolved into a more cohesive industry, he said.

"'We enjoy working with our builder customers, (and) we think think (security) is a business that will continue grow 15 to 20 percent a year," Immelt said.

While innovation and new technology is important, Immelt reminded the crowd that the customer is king.

"Try to find ways to dig deeper with your customers (and) deliver the things that they've been wanting," he said. "It's finding ways to make yourself indispensable for the customer."