Immelt as Job’s Czar, be afraid, be very afraid!

I know I’m a little late to the party, but it couldn’t be avoided. 

When I first heard that President Obama had tapped General Electric (GE) CEO Jeff Immelt to head the President’s Council on Jobs and Competitiveness, I had the simultaneous urge to laugh and vomit.  I avoided the latter (thankfully) and did the former – a great big guffaw.

Don’t get me wrong, Immelt knows a great deal about creating jobs – just not in the U.S.  China has been a huge beneficiary of GE’s job machine since Immelt took over.  Having Immelt as your lead advisor on domestic job creation and competition is akin to offering Bernie Madoff the job of government investment advisor: you’re not going to like the results (though in Immelt’s case, there will likely be no illegality involved).

I’m not sure whether Immelt is himself a committed environmentalist, but the corporate “Ecomagination” program is his baby and its all about green technologies. 

There is just one problem, most of the energy products in the Ecomagination portfolio don’t work as well as the products they are replacing, can’t compete in the marketplace and thus need government support – big government support.  Under Immelt’s leadership GE has gone from a company that competed well in the marketplace to one that curry’s favor with dictators (in China for example) – sharing GE’s technological innovations with the Chinese in order to gain entry to the market for its products, which are now produced in China – sucks on the government teat at every turn, supports policies that are bad for consumers, bad for our energy security, bad for GE’s workers.  For example, despite GE’s long history of making high quality incandescent light-bulbs, GE under Immelt’s leadership supported a Federal ban on incandescents.  GE’s last incandescent bulb factory closed in 2010 and its new CFL bulbs are made in China.   

In addition, under Immelt GE has invested heavily in wind and solar power technologies – both of which require huge government subsidies and neither of which can compete in the marketplace.  Since the costs of these energy sources is still too high to compete against traditional electric power sources like coal, nuclear and natural gas, Immelt’s GE is also one of the biggest boosters of the Obama administration’s plan to limit greenhouse gas emissions.  Any scheme to limit emissions necessarily raises the costs of energy in general, but of fossil fuel generated energy in particular – which would help wind and solar power reach price parity. 

Under GE’s previous CEO, the famous (some would say infamous) Jack Welch, GE made money by serving consumer demand for well-made, cost-competitive products.  Under Immelt, GE receives (notice I didn’t say earns) an increasing share of its revenue in the form of government subsidies, grants and tax credits.  Rather than competing to satisfy consumer demand, Immelt’s GE tries to bugger the competition with costly regulations while encouraging consumers to want different products, and, absent that, forcing them to purchase the goods he believes in his green wisdom, they should desire. 

Some might argue that at least GE is working hard, doing what is necessary, to deliver value to its owners, the stockholders.  If that were true, then some of Immelt’s pursuits might be understandable, if not forgivable.  However, under Immelt, GE’s stock prices have plummeted.  In 2000, the year before Jack Welch left, GE stock was trading above $160.00 per share.  A three for one stock split in May of that year left the stock at more than $50.00 per share.  Currently, GM stock is trading just at, or slightly below $20.00 a share. Hardly a ringing endorsement of Immelt’s Ecomagination fettish – and certainly of no comfort to its stockholders.  When Jack Welch left GE, the company had gone from a market value of $14 billion to one of more than $410 billion at the end of 2004, making it the most valuable and largest company in the world.  GE’s current market value stands at just $215 billion.  Even during the recent recession, most companies did not lose half of their value and few if any (except those that have gone bankrupt or that have been bailed out) are valued at less now than they were 1980.

In fairness, under Immelt GE has far outpaced most of its corporate brethren in one area of accomplishment: avoiding the tax man.  When President Obama railed in his speech against corporations, especially big oil companies, who he claimed did not pay their fair share, he should have looked closer to home for an example.  While oil companies pay billions in taxes, royalties and fees to the federal government each year, GE’s effective corporate tax rate was 3.6 percent – you read that right, one of the biggest companies on earth pays just 3.6 percent in taxes.  Before Obama goes after big oil for shirking its responsibilities, he should look more closely at his inner economic circle– to his new jobs Czar Jeff Immelt and the company he helms. 

I fear for this country if avoiding taxes, sucking up subsidies and moving jobs overseas is our new jobs and competition program.

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