If globalization were put to a popular vote in the United States in the current political climate, it would lose, General Electric Co. Chairman and Chief Executive Jeffrey Immelt warned on Friday.
If you put globalization up for a popular vote in the United States, I think it would lose 60/40, he told the India Institute of Technology Alumni 2007 Global Conference, a Silicon Valley event attended by thousands of India's top academic and business elite.
Immelt was responding to a moderator's question on whether the internationalization of the economy was likely to come under attack as the U.S. presidential election cycle heats up.
GE has shifted over the past three decades from one of U.S. industry's biggest manufacturers into a services-focused global conglomerate active in energy, construction, financial services and health care.
U.S. public acceptance of globalization will depend, the GE leader said, on Indians' and India's ability to figure out the win/win ... to figure out the ways that the whole pie gets bigger and (wealth is) not just taken from one place to another.
The bottom 25 percent of the U.S. economic ladder has suffered from the hollowing out of good-paying manufacturing jobs, he said, while trade deficits mount and middle-class financial jobs don't pay as well as industrial jobs.
INDIA OVER CHINA
Immelt's remarks came at the end of what was largely a corporate recruiting speech to attract top-flight engineers and managers to join GE. But the comments also had a political edge aimed at government officials in the United States and India.
I am a globalist. You are a globalist. We all believe in the strength of the global economy, he told the largely Indian immigrant audience, many of whom are entrepreneurs that form the backbone of Silicon Valley's thriving high-tech economy.
But the question is whether we will be allowed to globalize over the next 10 to 20 years, Immelt said. We need to earn the right to globalize, he said, adding that political and regulatory decisions are a big part of any calculation.
Immelt said issues like mounting trade imbalances and immigration policy figure in the debate. But he underscored that India-U.S. ties do not exist in a vacuum.
India's close political and economic ties to the United States gives it advantages over other big, fast-growing emerging economies such as China and Russia, whose growth may be coming at the expense of U.S. jobs, he said.
When I look at India versus China, China has a hard time with 'win/win.' That is a problem over the long term. India can do much better, he predicted.
NEXT WAVE OF GLOBALIZATION
Since the 1970s, General Electric has acted as one of the earliest and biggest multinational investors in India. The company employs 13,000 staff in the country. The city of Bangalore is GE's single largest research center in the world.
We have $3 billion in revenue in India ... on our way to $8 billion in 2010, Immelt told the audience. We are going to hit those goals and probably go right past them.
Wall Street expects GE 2007 revenue of around $175 billion. The company generates more than half its sales outside the United States.
Globalization is entering a fourth stage, he said. It started out importing high-end products from the United States to India, then turned to local joint ventures, followed by moves to build factories in China and India, its current focus. The next stage is designing technologies in India for the rest of the world.
As an example, GE is taking technology it developed in the United States for high-end magnetic resonance imaging (MRI) scanners and doing research in India to develop a low-cost, $500,000 MRI scanner that it can sell in emerging markets, including China. He said this could become a $1 billion export opportunity over the next five to 10 years for GE.