Jeff Immelt: All-American hero powers through the downturn

General Electric's chief executive Jeff Immelt is using the London Olympics to get to new emerging markets, he tells James Ashton
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The Independent Online

Bionic men stride across a giant LED display as children play ping pong in the sunshine below. Inside the German Gymnasium, a marketing suite next to St Pancras station around which this advertising hoarding has been wrapped, Jeff Immelt is feeling anything but bionic.

The chief executive of General Electric shifts painfully on the sofa nursing three broken ribs that meant he missed the Olympics opening ceremony the previous evening. Instead, the boss of one of the International Olympic Committee's 11 top-tier sponsors watched the antics of Bond, Bean and Becks on television.

"What I love about the Olympics is it's great for the people in the country," he says. "Last night was indicative of the UK. They were interviewing people on the streets and you could feel the pride they have in the country."

National pride is something that Mr Immelt knows plenty about. Created in 1890, General Electric is as American as apple pie. A generation grew up with GE fridges and, of course, lightbulbs, which were first dreamt up by its founder, Thomas Edison.

Yet tougher times at home mean this all-American conglomerate is increasingly looking overseas for new opportunities. Some 60 per cent of sales came from outside the US last year. And instead of fridges, now Mr Immelt predominantly sells generators, wind turbines, aircraft engines, locomotives and oil and gas equipment under the catch-all label of infrastructure.

Its kit is one definition of power. Another is leading a business with 300,000 staff and the ear of Barack Obama, for whom Mr Immelt took on the role of jobs tsar to try to tackle America's fears over unemployment.

"I think you've got to have a big motor," Mr Immelt, 56, says when asked how he keeps on top of it all. "You have got to have a big desire, a big motor and you've got to have a certain sense for yourself – be self-reflective."

There isn't much time for that this week as Mr Immelt buzzes between meetings with customers. Fresh from a visit to BP's headquarters, he bursts into GE's spotlessly white entertaining space, all smiles, firm handshake and a shock of white hair. Dangling around his neck is his laminated Olympics accreditation with the word "TOP" printed in bold. Never mind the onfield action, the networking Olympics is going on behind the scenes.

"I'm going to see basically everybody I can while I am here," he proclaims, a Coke with ice left untouched on the table. "You know, I never do anything that is pure fun anymore in my life. You are trying to meet customers and see different people when you come to things like this. It is a time for relationships and sharing ideas."

What could captains of industry be talking about at the moment? Try the economy, stupid. GE's recent trading spells out the shift. Customers need confidence to invest in its large-scale equipment. Hence sales to China were up 24 per cent in the last period and down 7 per cent in Europe. Meanwhile, America rose a creditable 6 per cent.

"I think it is important for companies like GE especially in Europe right now to say, we are here, we are staying, we are investing in the countries," he says. "The situation for all of Europe is how do you participate in a broader economy? I just read this morning that one of the things David Cameron is trying to drive is more exports. That is where the markets are; the UK has to find a way to participate in that."

Mr Immelt predicts the US economy will recover, despite data last week showing growth was slowing, and fears over tax breaks that tail off later this year, creating a so-called "fiscal cliff".

"The GDP growth hasn't been robust but it has been steady and I just think there is a lot of uncertainty around the fiscal cliff and elections and things like that are certainly having an impact. Underlying that is an economy that is getting a little bit better every day.

"Housing seems to have stabilised and housing is the big part of the US economy. In the case of GE, our exports are growing. "

Despite the obvious attraction of China and India, Mr Immelt's thoughts are already turning to Africa, where the commodities boom has spread.

"It is relatively new turf for GE, but I think companies today have to be in every corner of the world."

He has learnt how to be canny. Mr Immelt has spent 30 years at GE, following in the footsteps of his father who worked in an aviation facility in Cincinnati. Early on, he had to fix its fridges operation when a key component, its rotary compressor, was failing, leading to a product recall.

Then, at the helm, Mr Immelt has had to grind out results during a challenging 11 years. Not only did follow in the footsteps of the legendary Jack Welch, GE's leader for two decades, but everything changed four days after he took office in 2001, when terrorists struck the World Trade Centre in New York. International trade routes were redrawn overnight.

You could argue that GE's stock has yet to recover. It is almost half the level of when Mr Immelt assumed the top job and down 46 per cent in the last five years alone. That means the corporate titan's market value is smaller than Microsoft and 40 per cent the size of the all-conquering Apple.

Mr Immelt has reshaped the group, offloading chemicals and insurance businesses, as well as NBC, the American TV network, and shrinking GE Capital, the group's finance arm which suffered a $32bn (£20bn) hit in the credit crunch. In its place, GE has invested heavily in equipment used for oil and gas exploration.

"It is kind of a bet on the emerging markets, kind of a bet on China as you get a billion people that are driving cars and things like that," Mr Immelt explains. "Over time there is always going to be volatility around commodities, but over time there is going to be upward pressure on pricing – that would be our view."

Whenever GE needs a fresh direction, it seems to call on UK plc. In 2003, it splashed out £5.7bn on Amersham, whose medical imaging technology now forms the heart of GE's healthcare division. The company was the first big privatisation under Margaret Thatcher's Conservative government.

Then, when Mr Immelt wanted to invest in oil and gas, he snapped up oil drill pipemaker Wellstream for £800m nearly two years ago and added the well-support arm of John Wood Group for £1.7bn.

Not cheap, but then GE can afford it. The company had a turnover of $147bn last year and $85bn of cash on its balance sheet – financial might that is rarely seen in Britain. The deals have made sure all-American GE has become one of Britain's biggest exporters. Some 80 per cent of what it makes here is for overseas customers. The challenge now is to carry on harnessing the skills in a mature market like Britain.

"How do you get someone from secondary school to being a welder or something like that?" says Mr Immelt, recalling his work on Obama's Jobs Council. "No country in the world does that as well as we need to: not the US, not the UK. Every country ought to have a consistent focus on graduating more engineers."

And with that, he powers on to the next pow-wow, occasionally clutching his chest with a wince.

Playing the games: 'Worldwide partners' see Olympics as a money-making opportunity

General Electric is one of 11 "worldwide partners" for the Olympic Games.

It pays the International Olympic Committee an undisclosed sum for an association with the Games and aims to recoup its outlay through contracts and heavy marketing programmes. Other partners include Coca-Cola, the credit card firm Visa and Procter & Gamble, maker of Pampers nappies and Gillette razors.

"We are all business people so we want to do things that make sense, but we like the association with the rings and the brand," says Mr Immelt. "It is not only about money, it is about the association and being in places."

GE joined the Olympics' corporate family for the Winter Games in Torino in 2006. Its deal means it is already working towards the Sochi Winter Games in Russia in 2014 and Rio's Olympics in 2016. For London 2012, GE provided medical scanners for the polyclinic in the athletes' village and charging stations for a fleet of electric cars. It also supplied 14,000 lamps to illuminate the main stadium, as well as refitting Tower Bridge's lighting system.

Despite the range of projects, Mr Immelt admitted GE had done more business in Beijing, where much more money was splashed on preparing for the event.

"If you think of the Beijing Olympics, an incredible amount of money was spent – all new. We are going to do more business around those Olympics than we are going to do in an Olympics like London, where there are some new stadiums but a lot of rebuild."