GE CEO Claims Globalization is Outdated

23.05.2016 • Politics and War

From Capital & Conflict (GREAT BRITAIN) –

What happens when trade barriers and walls go up? What happens when people decide that the free movement of capital, labour, goods and services is no longer improving the world? The social mood changes. And when the social mood changes, people behave more like people and less like investors.

Seven decades of uninterrupted globalisation could be over, according to Jeff Immelt, the CEO of American conglomerate General Electric (GE). He gave a speech last week at New York’s Stern School of Business. As “captain” of one of America’s biggest conglomerates, it’s an insight into how CEOs are thinking about the world in 2017.

Immelt called for a “bold pivot” to counter what he perceives as rising populist political pressures. He reckons those are bad for GE and GE’s shareholders. But he recognises that while globalisation has been good for GE, the climate of good will toward free trade has changed. Here’s an excerpt from his speech:

Today: big companies are distrusted; governments and global institutions are failing to address the world’s challenges; globalization is being attacked as never before. This is not just true for the U.S., but everywhere. These sentiments have traction in Europe and Latin America, on both the right and the left. The future of the EU is an open question. Protectionist barriers are rising in Asia and Africa. China is repositioning its economy to be more sustainable and inclusive.

Many people feel left behind. The global economy is growing too slowly. Some workers have been displaced by outsourcing, the middle class has been squeezed and income inequality has risen to unacceptable levels. As technology and globalization race forward, people understandably fear their impact on jobs and incomes, and distrust the motives of companies and government…

Our politics make it impossible to reform old systems: our tax code is 30-years old; our immigration system is broken; and a huge structural deficit clouds the future.

Many other places are worse. While I believe in the European Union, it is tough to see Brussels driving growth. It has added bureaucracy without the ability to solve problems.

You can read the whole speech here. Immelt’s strategy for GE?

A “bold pivot” to “localise” and “digitise” the company so it’s more immune to “raucous” political forces in any one market. The company must essentially operate as many companies in many markets to serve customers in each market.

It’s a big departure from the peak of the tech boom. GE had one of the largest market capitalisations in the world (if not the largest). It was half industrial manufacturing company and half finance company. GE’s finance business got into mortgage and consumer credit during the peak of the US credit boom.

And then everything changed. And now everything’s changing again. Everything changes all the time. That’s the secret. You have to realise it. And as Immelt says, you have to put yourself on the right side of the change in capital flows to profit.

-Read More at CapitalAndConflict.com (English) –

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