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GE’s Trek Back to America: Is it for Real?

August 14, 2009

UPDATE-MARCH 30, 2011: Since I wrote this post over a year and a half ago, President Obama recently named Jeffrey Immelt to head his new Council on Jobs and Competitiveness.

General Electric CEO Jeffrey Immelt has been making some noise of late on the issue of repatriating a number of jobs back to the United States. This announcement comes at a time when GE has been hurting like other companies from the recession. But of note, GE was hit with a $50 million settlement with the US Securities and Exchange Commission at the beginning of August. This was the result of the SEC’s investigation into accounting irregularities by the company. In the face of this, accompanied by GE’s sliding performance since the departure of former CEO Jack Welch, Immelt (who took over in 2001) faces many challenges to restore this still powerful conglomerate.

In the past week Immelt has ratchetted up his talk, stating the number of new GE jobs for various US cities and towns. For example Schenectady, New York, will see 350 new jobs in the manufacturing of locomotive batteries. I’ve been through this upper New York state city, and while it’s pretty one can readily see how it has deteriorated over the decades from its past glory as a bustling railway town. These jobs will be welcome.

At the end of June Immelt spoke at the Detroit Economic Club. His talk was entitled An American Renewal: GE’s Commitment to American Innovation. The text of his address is worth reading to understand his vision for one of America’s great companies.

Legendary Jack Welch had not only vision but also incredible power in executing – in getting things done. His assertion that GE would be number one or two in any area meant that it exited from those it felt would be better left to others. Furthermore, Welch was a very strong believer in leadership development and continuous learning, teaching managers occasionally at the company’s own university.

For Jeffrey Immelt to achieve what he is expressing, he will have to display some extraordinary skills, especially given the opposing forces with which he’ll have to contend: lobby groups that favour the offshoring of manufacturing, multinational corporations that have no particular affinity to nation states, and possible foreign government resistance, notably emerging market countries. GE is a massive multinational, and as such there are those who expect it to disperse its production activities.

Immelt will have to display essentially what Jack Welch did during the 1990s, though the context and objectives are different this time. Below are some of the key leadership skills that Immelt will need to demonstrate:

– Clarity of vision
– Articulate communication – say what you mean, mean what you say
– Enrolling GE employees in his vision, including middle level managers
– (Realistic) Executable plan
– Cohesion within his senior management team
– Capacity to make unpopular decisions – such as sacking executives who are not with the program
– Adaptability – when the you-know-what hits the fan from external events, have the capability to roll with it

I personally hope that Jeffrey Immelt is successful. But he has a long road to go. The halcyon days of Jack Welch’s path to glory for GE are gone. But perhaps Immelt will accomplish something very positive for GE and America.

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