APICS Supply Chain Management Now

Intense Scrutiny for an American Company that Is Global

By APICS CEO Abe Eshkenazi, CSCP, CPA, CAE - October 14, 2011

General Electric (GE) CEO Jeffrey Immelt has received heavily mixed reviews since US President Barack Obama named him chair of the President’s Council on Jobs and Competitiveness early this year. Critics need look no farther than GE itself to dig up the Immelt controversy. Plus, according to the US Bureau of Labor Statistics, the unemployment rate is holding at 9.1 percent, with little indication that it will improve in the near future.

“Not since the Great Depression has unemployment been this bad for this long,” said Leslie Stahl in her introduction to a 60 Minutes segment Sunday. “One of the reasons is that US companies have gone abroad for their workers and their profits. Over the last decade, big American firms have cut around 3 million jobs in the US while adding almost as many overseas.”

Immelt has been unapologetic about GE’s global business and its jobs outside of the country. In fact, 60 percent of the company’s revenues come from its overseas businesses. However, GE is building manufacturing plants in the United States. In addition, GE is adding about 15,000 jobs in its home country, and half are manufacturing jobs.

“I’m a complete globalist,” Immelt said in the interview with Stahl. “I think like a global CEO. But I’m an American. I run an American company. But in order for GE to be successful in the coming years, I’ve gotta sell my products in every corner of the world.”

Monday’s Wall Street Journal article title reveals the hot seat on which Immelt sits: “Tea-Party Attacks Put GE on Defense” (subscription needed). The Tea Party and others criticize GE for its low federal tax bill in 2010, a joint business venture in China, moving jobs overseas, and more.

“GE has created more jobs overseas in the last decade than it did at home,” writes Kate Linebaugh. “GE employs more people outside the US than within the country. Its US employment dropped by 16 percent over the previous decade to 133,000 jobs at the end of last year while overseas employment fell by 2,000 jobs to 152,000.”

Immelt collaborated with President Obama to create a $447 billion jobs package. Now both men have spent the week working to sell the plan. It remains unclear whether Immelt’s position with GE will be of benefit or detriment to their efforts.

The politics of sourcing
GE’s tough position isn’t altogether unique. Companies face tough sourcing decisions all the time. While offshoring and outsourcing remain hot topics, the decision making behind offshoring traditionally was driven by labor costs, which seemed stable enough. However, with the recession and the subsequent loss of jobs, rising fuel prices, and a higher level of awareness regarding sustainability and labor practices, there’s a whole new level of complexity associated with locating plants and sourcing.

The World Café at the 2011 APICS International Conference & Expo will explore the sourcing crossroads operations and supply chain management professionals face. With so much that is outsourced, many decision makers and political leaders are talking about bringing it back “home”—home-shoring; on-shoring; and, to some extent, near-shoring. In this complex global business environment, operations and supply chain management professionals must be prepared to make the best decisions today and into the future. The interactive format of the World Café enables participants to advance their knowledge of the topic and better prepare for difficult business decisions in the future. Join us in Pittsburgh Tuesday, October 25, at 8 a.m. for this important and popular event.

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