It's Time For Polish Engineers to Shine - Interview for Rzeczpospolita with Jeff Immelt, CEO GE
It’s Time For Polish Engineers to Shine
Immelt: We will design and manufacture aircraft engines in Italy, Poland, and the Czech Republic
Warsaw, 20 June 2016
Q: You’re on your journey across Europe as it’s going through one crisis after another. We’re now in the midst of the migrant crisis, and Great Britain may soon vote to leave the EU. How this great uncertainty impacts business?
A: Speaking as a businessman I can see no single positive thing in the potential Brexit. But there are other challenges as well. For example, I may be a Republican, but I’m appalled by discriminatory comments coming from Donald Trump, there is simply no excuse for this kind of language. So the only thing I can do to protect GE is diversify our manufacturing and localize it accordingly, helping GE survive through political changes. I may dream of a perfect European Union where every one is happy, but I know it’s just wishful thinking, and since GE has always been a very grounded business I have never perceived Europe as a single monolithic body. GE considers each and every country separately, be it Germany, Poland, or France. Certainly, single currency and common labor laws help build a convenient environment for business, but we’re not naïve in thinking how this world works. Therefore, when plan A fails to deliver, we always have plan B, C and so on. What we need right now is a good investment climate, without this the world will not start moving forward. This is the key thing, we can then take care of everything else.
Q: Would you say that with the new Polish government in power investment risks are now greater than before?
It is the people who choose their governments, and our task is to make sure that we perform well in the wake of these choices. Since taking over as CEO and Chairman of GE I have seen governments from across political spectrum come and go, and in today’s political climate in Poland I can see nothing that would leave me with something to worry about. I would certainly welcome a structured solution to the Swiss franc mortgages issue and I do understand arguments coming from both sides of this debate. I don’t want to speak for the finance sector [GE is divesting its BPH bank to Alior, with the exception of its mortgage business], but I would expect this problem to be solved with integrity and fairness.
Q: Do you agree with economists warning against possible recession should Great Britain vote to leave?
A: I’m ready to face the worst, but I don’t think it will come to that. The real challenge for me is to survive through economic slowdown, volatile markets, and rising populism, which is precisely what the man in the street is currently discontent about. The root cause of it all is not that we are living in difficult times, but that there is no positive outlook for our problems to go away. I don’t really see the signs of 2008 happening all over again, but what the past and present have in common is that once again both businesses and consumers must address uncertainty instead of waiting for the situation to improve by itself. I can see no disaster lurking on the horizon, but I know also that monetary policy instruments can no longer be applied as a cure. This measure no longer serves its purpose, and what we now need is strong fiscal policy, and effective and stable governments.
Q: But isn’t it so that by relocating their manufacturing capabilities global companies also contribute to these problems?
A: There is no way we can entirely avoid these criticisms, but let’s just take a look at Poland. We are continuously adding here new jobs, and our presence is very much part of the local economy. We are far from being a “faceless” company, and although GE is one of the largest global companies out there, we are also part of the local economic landscape. So, if there indeed are some criticisms, then rather than to yours truly, they should be addressed to Beata Stelmach who leads GE in Poland. Now, I don’t mean to suggest that, structured as we are, we are entirely immune to errors, but it certainly helps to avoid them. I always want to know who the criticism is coming from, and be able to defend our position.
Q: Uncertainty that you touched on earlier in our discussion is partly driven by automation and digitalization that make people fear for their jobs. What would you say to them?
A: I want to transform GE into a digital company, and we have been investing heavily in digitalization, conceiving it, as we do, as a driver of productivity. It is nothing unusual that employees are afraid of new technologies, but GE is leveraging them to generate growth, and we’re offering long-term employment as opposed to seasonal jobs. When Uber enters this or that market there is nothing strange that taxi drivers start worrying for their jobs. But this is not how GE works. We cannot go backwards, we have to move forward and grow using whatever tools that are available to us. It’s fair to say that in 21st century creating jobs is part of corporate social responsibility.
Q: There are 12,000 people employed by GE in Poland. What are your plans for our market?
A: We want to take full advantage of your brilliant, highly skilled and effective engineers who can manufacture just about everything because top talent in Poland can compete on equal footing with the best engineers in the world. Their skills will certainly be valued in diagnostics and turbine manufacturing. I can see no reason why Poland shouldn’t become a leader in engineering and clean energy solutions that comply with environmental requirements.
Q: Polish government is betting on innovation. Do you think this is a viable vision?
A: Poland is not going to be a giant of innovation because it will never be in a position to successfully compete with Silicon Valley. It won’t be an aviation empire either since it is based in Seattle. But why not be a leader of an industry that leverages innovation? One way to build a strong economy is to identify and focus on areas that promise economic opportunity. Poland has already emerged as a strong competition to China, not necessarily because of cheap labor costs, but thanks to its productivity, willingness to learn, great education, and financing schemes for manufacturing operations. Whenever we’re deciding on where to take GE next, Poland, the Czech Republic, and Hungary are always considered within top 20 out of 160 countries that we have presence in. Political systems in the region are stable, the governments are effective, costs are reasonable, skilled workforce is available, and employees are loyal. And it’s a perfect location logistically where one day you manufacture a product and the next day you can ship it anywhere in the world within 24 hours.
Q: So what kind of investment from GE should we expect in the future?
A: Italy, Poland, and the Czech Republic were selected as locations where we’ll be designing and manufacturing technologically advanced aircraft engines. Historically, when we were scouting locations for similar products, in the end of the day Germany always emerged as the country of choice. But those three countries have now everything we need: effective export lending schemes, support for technological development, R&D experience, and 2,000 engineers offering the best expertise in the world.
Q: Polish government promised R&D tax breaks. Is it a factor in an investment such as yours?
Naturally everything counts as a factor. But mind that these engines will be in service for 30, maybe 40 years, and which government can last so long? Investment policy is not something we would adapt to in response to actions of any given government. But, rather than discussing politics, I would be more interested in how universities design their curricula.
Q: Has GE figured out how to take advantage of Polish coal in power generation?
A: With Alstom acquisition we have risen as a global player in coal technologies. The challenge now is to develop a technology that would be efficient and as clean as possible. There is no doubt that any new coal technology would be more efficient than it’s the case today. But the choice which way to go belongs ultimately to the government. Assuming that the current solutions operate with 30 per cent efficiency, GE can increase it to 45 per cent, effectively avoiding millions of tons of CO2 emissions. However, the question remains whether this fits in with the Polish energy mix, and that will be decided by the Polish government and Brussels, perhaps also somewhere else. This is beyond our powers of influence, but the offer is on the table.
- interview by Danuta Walewska, Rzeczpospolita