A bet on society’s potential

Interview with CEO of General Electric

Jeffrey R. Immelt, Wojciech Przybylski
4 August 2016

Employment in times of digitalization will become a question of corporate social responsibility. Wojciech Przybylski discusses with Jeffrey R. Immelt the impact of his business strategy on the region.

Having global outlook you must see local turbulences that have impact on your business even in places that have been the symbols of stability like the UK or the US. What troubles do you see on the horizon?

As a businessman I don’t see one positive side of Brexit. I am a Republican but I don’t accept a discriminatory language used by Donald Trump in the presidential campaign. I also dream of a perfect European Union with happy citizens but I know this is not possible. In GE we have always been realistic about how the world works and that’s why we diversify production to different locations in order to be resilient. We always have plan B and even C. But today we need a good investment climate without which the world will not move forward. We will manage with the rest.

Do you expect that Brexit will trigger recession?

I am prepared for the worst but the greatest challenge is to survive the time of slow economic growth and growing populism which make people frustrated because they don’t see perspective for improvement. But I don’t think that the situation from 2008 may be repeated.

You have been very much involved in the employment promotion in the US. In fact, the GE employment has been growing for years globally. How will digitization and automation affect employment opportunities in industry?

Digitization is a mechanism of productivity. We want to use digitization as another way to grow. Of course we do not know yet how for example development of artificial intelligence will affect our operations, but we will definitely try to match new developments with growth, so that our employment is sustainable. People have always been suspicious towards technological changes, and their fears of loosing or changing jobs are not ill founded; these are legitimate fears. However, a company does not have an option to look backwards. Whatever the most modern productivity tools are there, we have to be a leader at that place. And just try to figure out how then make people trainable. Sustaining employability is at the core of corporate social responsibility in the 21st century.

How much government’s public policy direction influences or helps you to make decisions where to invest next?

Of course this is an important factor. Both the substance and the symbolism of government’s message are important to investors. But when we speak about investment in industry, frankly, we think about producing engines in the factories we built for about 30-40 years. How many governments are you going to have upon you in the next four decades? From our point of view, the crucial thing is prediction about the development of engineering in Poland in the next decades. You’re making a bet more on society’s potential, on people, that than, say, on a tax regime, which changes a lot. Still, two things I find really encouraging right now are export financing and R&D, whether it is from tax credits or something else.

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You have a strong focus on this region. How has industry changed in last decades in Central Europe?

The region proved that it has really highly skilled, capable and efficient engineers. In other words, productive engineers who are technically competent and cost effective in comparison to other places. So far, global companies like General Electric have benefitted from the local engineering scene here, but haven’t yet put together full systems: starting from engineering, through design to manufacturing products which are later exported outside of the region.

What do you expect in the future?

It all can be done in Central Europe the same as it is done nowadays in France, Germany, in the US, Japan, or China. This is the next step. To give an example, GE is about to start manufacturing an advanced turbine product in Poland, the Czech Republic, and Italy. It’s probably the first new jet engine that we have ever designed and manufacture completely in Europe. I speak here of a highly engineered industrial system that uses advanced material science, mechanics, and physics. Usually people associate production of such systems with Germany. But we’d like to give them things before people think they’re ready to see them. Another interesting indigenous thing about Poland is its dependence on coal. This poses an exciting challenge for engineers: how efficient and environmentally friendly you can make coal power plants? What can you do? I think there is a set of innovations that are unique for Central Europe and companies should come up with solutions for problems that exist here, locally. One thing that never ceased to amaze me about energy is how much it continues to change even from old industry and how local solutions are important.

Do you see any clouds on the horizon?

We are living through a period of global instability, with alarming lack of public trust in institutions. So many things I took for granted in the 90s or 2000s are different in 2016. People are dealing with an unprecedented change. I think the macro volatility is something that we all have to be concern about. Where does it lead? There is more protectionism, there are more military conflicts, we are perhaps still in recession. If you have lack of investments, fear of technological developments, and political and economic systems that break down, you get massive frustration. It’s just a time period of impressive volatility and that always has impact on business.

Having seen the world economic recovery from the distance how would you compare US strategies to getting out of the financial crisis and the European response?

That’s a great question, I’m not sure…. How people address banks has been different in every place around the world and you could say that the US dealt with banking problems in a quicker and more resolute way than in Europe. But in terms of economic growth, just cutting interest rates is not a growth strategy. And I think that’s the issue in the US, that’s the issue in Europe, and that’s an issue in Japan. The only way to provide the real economic growth is through more investment.

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