Leslie Stahl had an interesting interview with Jeffrey Immelt, CEO of GE and Obama's new Jobs Czar, on 60 Minutes last Sunday. At the end of the interview Stahl asked, “Do you not see any reason that maybe the public doesn’t hold American Corporations up there on high?” Immelt responded by saying, “I think this notion that it is the population of the US against the big corporations is just wrong. It’s just wrong-minded.”
Earlier in the interview, Mr. Immelt emphasized his point that US corporations should be admired by the American public:
I want you to root for me. You, know. Everybody in Germany roots for Siemens. Everybody in Japan roots for Toshiba. Everybody in China roots for China South Rail. I want you to say, “Win GE!”’
There is a good reason why the people in those other countries root for their local corporate conglomerates, while Americans do not. It’s because their corporations are also rooting for them.
They each place local jobs, workers' rights and workers' benefits high on their list of corporate priorities. In addition, they place a high priority on paying their “fair share” of federal taxes and maintaining a high degree of corporate citizenship.
However, in America, the entire list of corporate priorities tends to be dominated by actions which make more money for the corporate executives and the shareholders, while little emphasis is given to the well-being of the corporations' employees.
Like General Electric, the Siemens and Toshiba examples that Immelt mentioned are large international conglomerates with a large percentage of their employment located overseas. But, unlike General Electric, those companies tend to outsource jobs overseas only in cases where their foreign employees have different skill-sets than those that already exist in their home-country facilities. They tend not to downsize or shut down local factories and reestablish the same employee-base overseas.
This is usually not the case in the US. Jeffrey Immelt presented a perfect example of this during his 60 Minutes interview. Immelt walked Leslie Stahl through GE’s expanding locomotive production facility in Brazil, a factory that makes the same products as GE’s US Locomotive Division located (for over a half century) in Erie, Pennsylvania. Some, or all, of these locomotives could have been built in Erie. But they weren’t because GE used only cost-based analysis to determine its foreign outsourcing. "Keeping American Jobs" was not an important factor in that decision.
In recent years, GE’s Brazilian locomotive production facility has added a significant number of jobs, while GE’s Erie, Pennsylvania operation has been faced with significant layoffs.
Furthermore, the corporate and government established social safety nets for the employees working for those foreign corporations are much more beneficial to the workers. The defined-benefit retirement plans in those countries are being strengthened, while the US Social Security and corporate-provided defined-benefit retirement plans are being reduced or are being threatened with elimination.
Employee healthcare comparisons are equally distorted. Both Japan and Germany provide cradle-to-grave healthcare for their workers. US workers, however, pay twice as much for their healthcare and receive less quality and efficiency in their healthcare programs
In regard to paying a fair share of taxes, Mr. Immelt mentioned during the interview that he is seeking to have a lower corporate tax rate in America to “help create jobs.” It is interesting to note that both Japan and Germany have corporate tax rates that are similar to the US and, because they have none of the corporate tax loopholes that are prevalent in the US, both Toshiba and Siemens paid substantial federal taxes last year.
General Electric, on the other hand, paid no federal taxes in 2010.
Jeffrey Immelt summarized the US corporations’ place in our society when he was asked by Leslie Stahl, “Don’t American corporations have a civic responsibility to create jobs?” Mr. Immelt shook his head and said:
My name’s not above the door. I work for investors. Investors want us to grow earnings and cash flow. They want to see us be competitive. They want to see us prosper.
Shouldn’t US corporations want to see their employees prosper as well?
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AND provide their shareholders substantial profits!
Which North American companies do that?
Congrats on the EP !
Actually, the “before-tax income inequality” ratios in Japan and Germany are similar to the US (See: http://csis.org/blog/us-tolerance-income-inequality).
However, both Japan and Germany have very high income and social taxes on the rich, returning a large portion of their income inequality to the state.
The “after-tax income inequality” in the United States is much higher than most developed countries.
I too have heard of Japanese corporations having employee representatives on their boards. Imagine what a tremendously popular move that would be if American corporations were to adopt the same practice.
Could it happen here?
I might be a nice person, I might be a hard worker, I might be a slacker. It doesn't matter. I'm a line on a spreadsheet and the next one to be cut.
GE (and my former employer) are all the same, and all of us know it. Why exactly should I be loyal to them, or cheer for them?
My dad worked all his life for Ma Bell, and still tells stories about it. When he started in the mid 50s, the old guys had been through the depression with Ma Bell. She never laid off anyone. The management cut everyone's hours equally, to spread the pain, but everyone stayed alive, everyone had a job when the whole country was going down the tubes. Those people were loyal to the grave to Ma Bell for standing by them when times were the worst.
I haven't heard of one company doing this in this downturn. Can you imagine? They'd be laughed at as socialists. But they'd have really loyal employees.
So it sounds to me like any additional revenue from lower taxes would be kept as profit, not used to "create jobs."
GE is what it is only because of America- as of now he, and the Board, are seditious traitors who ought to have a penalty tax levied on them for last year alone.
The irony of corporations though is that we can punish them anytime but ceasing purchases ... the sooner this happens in an organized fashion to GE, the better.
The health care system is another matter, though Obama's compromised bill, if not overturned by the Supremes, should improve things.
As for treatment of employees, too many corporations look to maximizing profits and share prices in the short term. That makes employees immensely dispensable. I don't know what a remedy for this might be.
if you are unwilling to change the fundamental rules, learn to endure the results.
For over a decade companies like GE have been claiming lower taxes will create more American jobs, but instead they have used the additional wealth to increase their own holdings overseas in countries with little or no labor laws.
We compete in a global market, and the US is still a large market for goods and services. Maybe we say go ahead GE ship the jobs overseas, but don't expect to import the good backs into this very large market without paying a major tariffs. It is time to rethink our trade agreements with China and others.
Thank you.
buying a house
As for German companies, he forgot to mention that the Germans root for German companies because they support their workers. The fact that CEO's in Germany are actually elected by the employees, and not INVESTORS!
I am also reminded of a speakerphone conversation I overheard while working as a plant tech. I was in the office of the CEO of a large power corporation here in Florida. He was talking on the phone about a trip he was making to Germany, to meet with the CEO of the M.A.N. corporation. They had evidently purchased some generators from them. He was asked if he would preside at a dinner for the employees. His reply was "absolutely not! An American CEO, does not lunch with employees!"