A rumor was making the rounds last week that General Electric Chairman Jeffrey Immelt might be departing his corporate job for a position in the federal government. The rumor may have been started by GE shareholders, who can’t be pleased with how Immelt’s tenure has unfolded since he assumed the top job at what was then an American icon only days before 9-11. The stock barely moved at all during his first six years as Chairman (its high in both 2002 and 2007 was about 42 dollars) but once the second Bush recession hit GE’s fortunes faltered badly. Today, the shares of longtime rival United Technologies have resumed their decade-long march upward, while GE shares seem to be languishing.
Under Immelt, GE has sought to position itself as an avatar of American competitiveness, embracing the free-market values of Ronald Reagan in its corporate image ads. Reagan hosted the General Electric Theater anthology series on CBS from 1954 to 1962, when GE fired him because of discomfort over his conservative political views. Immelt has spoken frequently of the need to bring manufacturing jobs back to America, and he has maintained GE’s role as a major manufacturer of industrial items such as jet engines, locomotives and power-generating equipment. President Obama named Immelt to head the administration’s economic recovery advisory panel in January of this year.
Unfortunately, GE under Immelt has seemed conflicted as to precisely what its corporate philosophy is. David Smick notes in the June 6 issue of The Weekly Standard that GE eliminated 34,000 U.S. jobs between 2000 and 2009 — in other words, about ten jobs per day for ten straight years — which makes Immelt’s leadership of the recovery panel a bit odd. And GE apparently paid no corporate income taxes to the federal government last year while other major companies were paying up to 35 percent, even as it lobbied to secure billions of federal dollars for a fighter engine that both Obama and his predecessor labeled a waste of money. So Immelt’s track record is decidedly mixed, both from an investor’s perspective and from a good-government point of view.
The problems with Immelt’s tenure don’t end there. GE’s forays into renewable energy face an uncertain outlook. Its agreement to assist China in developing commercial transports has alienated traditional customers like Boeing. And United Technologies’ Pratt & Whitney unit may have found a pathway back into the commercial engine business — at GE’s expense — with its innovative geared turbofan. So even with all those unneeded workers gone and unpaid taxes retained, GE’s business outlook is unclear. That doesn’t mean Immelt is going to depart GE anytime soon, but it does mean some people wish he would.
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