Jeff Immelt, CEO – GE, gave a set of interviews with LinkedIn this summer. Although it’s been a few months, the discussion points apply just as clearly now. I’d like to highlight a few statements that caught my ear specifically in a manufacturing context. Take a few minutes to watch, or re-watch, the videos [links at bottom] to consider how this applies to you.
“The days of wage arbitrage are over. When we go to China or the Middle East, it’s to get access to those markets… and we’re a $20 billion exporter.”
- GE is a model enterprise in that they combine “local for local” manufacturing with great exports of global standard, high tech products. This mix of local customer knowledge and leading edge technology is an enviable position.
- While not every company is in GE’s position, the concept of moving production to a low wage country to re-import the same products, especially if it divorces production with product development and the delivery ecosystem, is often short sighted and unjustified.
“I would say to every executive who may be watching this – you’re on your own brother! If you’re waiting for TPP, if you’re waiting for the Republicans to get why the export bank’s important, you’re going to be waiting a long time, so chart the path on your own.”
- From my perspective this is not a political point – it addresses the concept of waiting on anything outside of your influence. Action creates results. As Charlie Munger said, “Microeconomics is what you do. Macroeconomics is what you put up with.” If you’re waiting to decide based on a macro event outside of your control, you’re losing ground.
“Industrial companies averaged 4% productivity from 1990 to 2011. Now it’s 1%. This is going to be survival – how you get your assets optimized, how you get them to operate, how much risk you’re willing to take.”
- The productivity stats are clear, what I would add to Jeff Immelt’s points are organization and systems. Most manufacturing companies have not evolved their organizations and systems at the pace they needed to in the past 10 years, and the only way they’re going to find gains that matter are by creating more meaningful change.
“Coming into the company, you’re going to learn to code.”
- Government, business, and individuals all share ownership in education. The greatest share will always rest with the individual – but business has tremendous opportunity in educating and training their personnel. Decentralization and ground up decision making work when information is at hand and people are trained with the right capabilities to act.