Just blocks from his new office (no longer “palatial” and no longer in Connecticut), General Electric CEO Jeff Immelt goes long on digital disruption, how to operate globally after all these years, and how the Trump Administration could affect manufacturing for years to come.
We want to do analytics on top of our assets, we want to go back into the supply chain through additive, and that’s what I would call a digital industrial company. When I became CEO in 2001, we did insurance, media, industrial, plastics, everything. We were a conglomerate, and now we’re a digital industrial company."
- Jeff Immelt
Title: Chairman and CEO
Organization: General Electric
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Table of Contents:
- Even In New Digs, Immelt Paints As Big a Picture As Ever for GE
- <strong>Smarter Workers, Smarter World</strong>
- <strong>Operating Globally, and Preferably Not on an Island</strong>
BOSTON — For years, Jeff Immelt could sequester himself in his office at General Electric headquarters in Fairfield, Connecticut. He could dive into reports, he could call managers at any of the company’s 500 or so global locations, he could just stare past the Oriental art on the walls and right out the windows. “Nobody could see me work,” he said, “Which was great. I could just sit and watch TV all day if I wanted to.”
Not anymore. GE announced plans to move its headquarters 160 miles northeast to Boston last year, which Massachusetts governor Charlie Baker called “a generational decision,” and the chairman and CEO was among the first employees to pack up his old office and ship up to the Hub.
“Now I’m in this cubby with windows,” Immelt said. “I’m like an animal in the zoo. I sit there and everyone can see me.
“I actually have to work now.”
GE will celebrate its quasquicentennial next month — thanks to the April 15, 1892, merger of Edison General Electric and Thomson-Houston Electric — and the new digs are a perfect backdrop. “Being in a city filled with ideas keeps an old company younger,” Immelt said. “It gives us a little more edge.”
The same could be said for Immelt himself, who turned 61 last month and appears as lively as ever. He still delivers speeches, visits plants, dishes about everything with the press — often in three different cities all on the same day. He is high on digital and additive, high on the intelligence of GE workers (though not on robots replacing all of them any time soon), high on the potential effects President Donald Trump might have on the domestic and global economy, and high on … cable news? All that and more.
The company will turn 125 next month. There are p.r. pitches, and there are media storylines, but what, from your perspective is GE right now?
I hate to be so trite, but I would call us a digital industrial company. The only financial service we do today is around our investor assets, we’ve exited things like media, and our job right now is to get deeper, not broader. We want to do analytics on top of our assets, we want to go back into the supply chain through additive, and that’s what I would call a digital industrial company. When I became CEO in 2001, we did insurance, media, industrial, plastics, everything. We were a conglomerate, and now we’re a digital industrial company.
The key thing is to keep trying to stay ahead. You go through these periods of change and you keep trying to stay ahead.
You’ve driven incredible efficiency in automation, and if you look at manufacturing versus other sectors, there’s been a lot of growth. When you look big picture, are you at all concerned with what your workers need to learn?
From the mid-1980s to 2010, the productivity in the United States was about 3%. Productivity today is 0. The way to create high-value jobs is to create productivity. Those two tend to go together. So what we’re working on are, basically, tools to drive productivity, to make workers more valuable. Before we go to the phase where it’s only robots in every factory, we’re going to go through a phase of smarter workers. You’re going to have service people that can fix things right the first time, every time. We’re going to add workers, but probably not as many as we would have 20 years ago. They’re going to be more productive — smarter, more valuable, more productive — and that’s Phase 1. This notion of the War of Robots in the short term, that’s more of a Silicon Valley vision than it is the real world.
Beyond that, we’re big enough to train our workers to do that work for us. A small business — I was in Alabama the other day, where we have 180 suppliers — most of them can’t afford the training that it’s going to take to train their workers. That’s one place where the private sector is either going to have to invest more in training, or the public sector is going to have to do a better job of getting them ready.
Do you feel any responsibility to play that role?
We’re good at it.
So that’s Phase 1. What’s Phase 2?
I’m not that smart (laughs). In other words, I don’t know how many phases we’re going to go through. The pace of technology is amazing, but I’m still thinking we’re going to be in the phase of smart workers for a fair amount of time — and I think we’re better off as a country focusing on the smart worker phase than going right to robots for anything.
To what extent does that affect your ability to sell your solution down the supply chain?
When I look at our customers, I think we can work with our customers, helping them create their digital workforce. We can go to an Exxon, or a utility, and we can take some of our service solutions that we’re doing on Predix and things like that, and offer it to them. We allow the basic utility field worker to have the same tools that a GE field worker has. I think the bigger question is, How much do we backward integrate as a company, because we’re that much further than our suppliers, versus how much do we partner and train?
Now the other piece of this is, there’s a difference between outsourcing and globalization. Pure wage arbitrage, that was globalization for me in the 1990s. Globalization for me today is, how do I get 70% market share of jet engines in China? And I think the political media confuses the two. Everything in globalization is viewed as wage arbitrage. Go to Mexico, go to China, ship it back here, that’s not globalization to me. Maybe in other worlds, but that’s not how we see it today. Wages just aren’t that a big deal with a lot of stuff we do, because the workers are just so valuable.
Are you worried the public isn’t going to understand that?
It’s a great question, and it’s one of the big questions, because it is hard to explain. Globalization takes an hour to explain, not 10 minutes. It’s an easy thing to get arbitrage, but in other ways, it’s hard to do.