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GE CEO Immelt Urges Deregulation, Tax Reforms to Revive US Competitiveness

GE CEO Immelt Urges Deregulation, Tax Reforms to Revive US Competitiveness

 (DPC)

Monday, 27 February 2017 12:45 PM

The United States is "diverging" from the rest of the world and will be "less of a leader in trade," General Electric Chief Executive Jeffrey Immelt said in a letter to shareholders.

There was "deep skepticism" toward the ideas that have powered economic expansion of the industry for a generation and concepts such as "innovation, productivity, and globalization" were being challenged and "protectionism" was on the rise, he said in the letter. 

"We're in an era when some very basic assumptions about the global economy are being tested - an era when trust in big institutions is so low that the most valued 'strategy' is simply change in any form," Immelt said.

President Donald Trump has vowed to stop U.S. manufacturing from disappearing overseas and in January formally withdrew the United States from the 12-nation Trans-Pacific partnership trade deal. Trump also wants to renegotiate the North American Free Trade Agreement with Mexico and Canada.

However, Immelt, also said years of bad regulatory and economic practices were being stripped away to promote competitiveness, Reuters reported.

Immelt highlighted GE’s investments in factories around the world while making a case for the company’s pro-globalization outlook. While Immelt didn’t mention Trump by name in the 32-page letter dated Feb. 24 and released Monday, the CEO addressed many of the themes important to the new administration, including U.S. manufacturing employment, trade policy and corporate tax overhaul.

GE is trying to walk a fine line, making a case for the type of globalization that has been central to the company’s growth in recent years, and also positioning itself as “a proud American company” that’s creating jobs in the U.S.

While Boston-based GE’s sales have shifted from about 70 percent in the U.S. in 2000 to less than half today, Immelt noted that it exports more than $20 billion a year, keeping domestic factories churning, Bloomberg reported. 

“GE is a global company today and in the future,” he said.

This month, GE joined a number of large exporters, including Boeing Co. and Dow Chemical Co., to form a coalition in support of a congressional proposal to tax imports to the U.S., a central component of a possible overhaul of corporate tariffs. In Monday’s letter, Immelt said current policy “favors imports, not exports,” creating an uneven playing field that benefits companies outsourcing work overseas.

Opponents of the plan, which include automakers and retailers such as Target Corp., say it would generate a disproportionate burden and force them to pass along costs to consumers.

While Immelt is optimistic about 2017, a sluggish economy in recent years has led GE to invest heavily in internal operations to improve productivity. The company is expanding 3-D printing operations to enhance manufacturing and building a digital division that will help customers get more value out of equipment. The company expects its new Predix operating system to generate $1 billion of orders this year, while overall digital software orders may top $5 billion, Immelt said.

GE aims to grow organic sales 3 percent to 5 percent in each of the next two years while expanding margins by 100 basis points annually, he said. GE is also “on track to hit strong double-digit EPS growth despite a volatile global economy.”

Immelt noted the progress GE has made integrating assets acquired from Alstom SA, as well as the benefits that the pending merger with Baker Hughes Inc. will give GE’s oil and gas business in a challenging market. GE has about $10 billion of unallocated capital that can be used for acquisitions or buybacks, Immelt said. But after a number of major deals in recent years, he said “the GE portfolio is pretty well set.”

Acquisitions have helped GE build a global manufacturing presence, enabling the company to gain access to a variety of international markets. Immelt highlighted the importance of China, saying “every company and country needs a strategy to engage the second-biggest economy on Earth.”

GE’s vast operations enable it to build locally and obtain financing in many markets, making the company less reliant on trade deals to remain competitive, Immelt said. That trend will become more important as the nature of globalization shifts toward one favoring local investment and jobs, he said.

“We see many giving up on globalization; that means more for us,” Immelt said. “Are we witnessing the end of globalization? I don’t think so.”

(Newsmax wires services the Associated Press, Bloomberg and Reuters contributed to this report).

© 2021 Newsmax Finance. All rights reserved.


Economy
The United States is "diverging" from the rest of the world and will be "less of a leader in trade," General Electric Chief Executive Jeffrey Immelt said in a letter to shareholders.
ge, immelt, trade, world
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2017-45-27
Monday, 27 February 2017 12:45 PM
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