Transcripts For BLOOMBERG The David Rubenstein Show Peer To

BLOOMBERG The David Rubenstein Show Peer To Peer Conversations February 4, 2017

John considering ge does business in every country on the planet. Jeff people see globalization from 30,000 feet dont know how globalization works. John and immelt even talked about his own future. Have you thought about life after ge . John all that and all that and more coming up in my conversation with jeff immelt. Trumps ban on people from some muslim countries being able to visit your head office. What is your reaction to it . Jeff i sent something out to all of our employees because we have a lot of people who live outside of the United States and they are afraid of what is going on. We speak out to say, gosh, we understand that safety is really important. But we also want to be able to be but we also want to be able to work with the people of ge, and still travel in and out of the United States. And we dont want to lose our contact us with customers around the world that want to buy products, not just from ge but boeing, caterpillar, u. S. Manufacturers. Again, we set our peace on those. We said we understand the context safety. But we think there are better ways to do it. We are not opposed to speaking out on that. Saw you were at 1. 4 billion with iran. Threat . Ow under jeff that is wellfinanced, well structured. The teams are in place. Most of the products come from the United States. I think most of those projects will go forward. But, again, we prefer a time goodd where you got communication zynga context between the government and governments around the world while understanding security is still a challenge. John underneath that, is there still a threat of all the advantages ge has built up . Hiringe specialized in all around the world. Workforce comes is there a limitation on it . Speakit is up to me to how important it is that the u. S. Have good relations with our potential customers around the world. , you know, people john, we have people on the ground that are iraqis or italians, and they can help with our local customers and provide that local face. John in terms of building walls with mexico or this van of people coming in, the setup manufacturing . Jeff i think that philosophically, we believe in trade. We believe in the free flow of goods. Inherently, we do not think that walls are good ideas. Thes put that that is background. At the same time, there is nothing wrong with resident trump wanting to add manufacturing jobs in the United States. The president of china wants to add manufacturing jobs. The president of the chancellor of germany must and manufacturing jobs. How do we find a way to help exporters . Right . That is a good thing. John what about the relationship with china . Is the prospect of any kind of trade dispute with china, does that worry you . Just in the ge context, but an economic context here it there is no good case not just in the ge context, but in the economic context. There is no good case where the two biggest economies on earth are going to trade. I think that relationship, that bilateral relationship is significantly important for the whole world. And so, that is one i would be very strong on. Good sign that donald trump respects the issue of deregulation. And the issue particularly of corporate tax. Do you think there is a possibility that this is an area where business could have a benign effect on administration . Jeff you will have different camps that have different you know, i respect walmart but we , are going to have a different perspective on tax reform. We are going to have a different starting point. So, all of our voices need to be heard. But if the president cannot act on tax reform with the Republican Congress and republican presidency, that is a big miss for where we are right now. Regulations have exploded. The need regulations, but they should be massively simplified. John you look at brexit and trump i suppose you are trying to help. People did not feel that the system was working for them whether because of technology or wages or things like that. I am not trying to solve all of those problems. I am natural i can do it, and make everybody feel differently about globalization. What is up to us is to navigate the system as it exists today, but at the same time, communicating to the people who voted for brexit or people who elected President Trump, at the end of the day if we want to , create more jobs, we shouldnt alienate everybody around the world. Because they buy jet engines. Customers around the world have put food on the plate of thousands of american workers, and do that today. And we need to connect those dots, even when it is unpopular. John is it an inevitable thing that more and more jobs he come more automated more and more jobs become automated . You employ a lot of people for services to connect this factoring. Is it harder to justify that . Jeff there is a path we go through first, which is making existing workers more productive. Industrial productivity has gone from four to zero. Wages are stagnant. I think this i think their interim steps. There are interim steps you make your existing workers more productive. And that is still the most multinationals can do. Calling on them to do more than that is unbearable. Jeff i think President Trump tweeting and calling people out there is nothing wrong with that, really. At the end of the day, each one of us in our own way has to navigate our own companies through this world that we live in. John up next, ge ceo weighs in on globalization and world after and a world after brexit. Jeff i wish it was all free trade and all that other stuff. That is not where we are. John general electrics jeff immelt has spent his career riding theer wave of globalization. More than half of ge sales come from outside the United States. The donald trump selection has revisited a shift to a less global world. In my conversation with jeff immelt, i asked of globalization is about to go in reverse . Jeff the essence of globalization had been chanting long before the exit and President Trump. I started globalization in the 1980s. It was shutting down factories and moving them to mexico for the purpose of having cheaper wages. Now it is about penetrating china, penetrating new markets. You have to do it in a more local player today. It is all about market development. Ago was anyears washington d. C. Now we dont count on trade deals. We dont need trade deals to be effective globally. A kind of crafted what i call multilocal franchise that we can run in and out of 185 countries. John if i looked inside your supply chain we would still have , to cross borders within that. That would still matter, even if the final manufacturing must and . Jeff we are at a 22 billion in export from the west we move stuff from around the u. S. We move stuff from around the world. There are two types of business when you feel great. One is when everything is perfect. When everything is in chaos. We can navigate whatever system is put in front of us. We would rather have john you think the world is moving towards the chaos . Jeff it was going there before President Trump. Know, theeen, you role of china there are four or five things that have happened better really seismic changes that have led to this version of globalization, kind of breaking down into being more of a multilocal world. Pretrade . Of jeff wto and multilateral organizations. I think that was breaking down long after the last 12 months. John do you think ge would grow faster in that first year when you talk about jeff lets make it really simple. All of your viewers should say out loud we think exports should grow. That is why we canceled our export bank. I think that would be help will to us, but we dont have time to sit and argue each and every time it goes on. We still see good prospects on a global basis. Joys ofu mentioned the brexit. Now you have the possibilities of japan. Are you confident about europe . Do you worry about what happens in the eurozone . Jeff you know, i am not surprised anymore. [laughter] to be honest with you, with everything that is happened. If anybody wakes up anymore and says they are surprised by anything, so. We have never looked at europe is europe. We know the difference between france and germany. And 2014, we were stopped in paris by a set of decisions that basically violated brussels rules brussels rules. We were sitting there as an American Company sucking our thumb in paris. And we have to fight our way out of paris. Then we had to fight our way out of brussels. It didnt feel like the european union. So, we have learned how to manage paradox of the company. We learned how to manage subtlety is a company. People who see globalization from 30,000 feet at a resort, or in a townhouse, or a think tank, dont know a thing about the way globalization really works. It is country by country, deal by deal. Now, i wish it was all free trade and all that other stuff. That is not where we are. John next, we will talk about general electrics transformation. Jeff it was that every day. It has changed. John jeff immelt has transformed ge after taking over as ceo in 2001. Recently, he relocated the companys headquarters from connecticut to boston, raising the question what is next for ge . Talk about ges transformation. You are from manufacturing to services. You now make quite a lot of noise about software. Describe that to me and where it ends up . Jeff it was more of the recognition that our new jet engines had a couple of hundred sensors on them and provide this continuous stream of data. We made the decision that we want to model that data on behalf of our customers, and not relegate it to somebody else. That led us back into the chain of adding software talent. So, our theory, john, is that every Industrial Company will have to be an Additional Software company. We wanted to leave that kind of path. Do you feel at home in ge . Jeff i had to relearn. One of the things when running ge is you always have to say why not us . It is like, what is next . We bought in a lot of people from the industry, but i have had to learn new ideas. John how do you deal with that . Ge has a famously strong culture. It has hockey playing elements. Which is not exactly jeff you have to recruit the talent. Get people that are comfortable with the speed and the culture in silicon valley. The way people get paid. The pace in which you got to go. People have to learn to live in a horizontal and vertical world at the same time, but then bring in additional people. If youre in an airplane at 30,000 feet, do you want to think that the people who may affect engine quit their Company Every five years . [laughter] what will you look like in 20 years time . Have anthink we will industrial core, but we will be a big Software Player in 20 years time. I dont know if we will be broader as a company. I dont know if we are going to be in more industries. We are going more information all the way through how things get made. So, i think youre going to see a ge that is deeper, maybe not broader. Analytics, making the parts through added manufacturing, right . To me that is more added content , in the industries we serve. John did you say 3d printing . Globaletting back your point, one of the things about the analytics is that it democratize is the supply chain. A factory says you could do with 500 people what it used to take 2000 people to do. That is another thing to factor in. We are investing in both of these in a substantial way. Mg is thecore core of ge still taking people jeff i think management is key. i think you always have to be good in culture and leadership. Nothing is general anymore. When i first became ceo we had insurance, media. We made jet engines. That is too hard today. You got to have this combination of depth and breath. And you have to have managers that are maybe more technical. We have had to reshape leadership. Of ge goingd system to work at nbc, there needs to be a shift . Jeff i think it is much more constrained. You want to have people who are broad and deep. You cant pick the right ideas. See other companies emerging that look more like ge . Jeff we have a ton of respect for siemens and the core competitors, but we study all the chinese Data Enterprises and all of the indian conglomerates. If weranoid about get into analytics, we are going to compete with i. T. And Tech Companies we always view the competitors. But we are comfortable with breadth. If you see Something Like that 30 billion company that is too small, that is not us. We like the breath of the company. We think there is strength and diversity and not weakness. John acquisitions within the current structure . I really believe we have so much more we can do and the Value Creation for our investors could be deep. John you have conglomerates around the world. Many of the chinese companies, they go across 50 industries. Is it eventually merge into something jeff i believe so. They all have the advantage of a whole market. Eventually, today, you have to be really good at everything you do. That naturally for just some consolidation good john naturally comes with consolidation. Jeff the company is more technical. It is more global and more focused on the customer. Those other things. When i was ceo, we were 70 in the United States. Now, we are 70 outside the United States. Thats the kind of way you reshape the country. John do you have a sense of how much longer you will keep going . Jeff we always have a group of successors, and i always think you have to earn it every day. I have been doing it a while and i feel great and we will see buried goes. John any plans to go anywhere n the next two years . Jeff jeff who knows. I love the job. I love the company. On one hand, it is so confusing. On the other hand, it is so interesting. In 2008. It was that every day. You are seeing in front of your eyes some of the things being challenged. Four 330,000 people who i love and care about, it is to help them navigate through this crazy world we live in. People feel more loyalty to companies than they do to other institutions . Jeff some of that, but not because we do not feel like we citizens. I am an american and i always identify ge as an American Company around the world. But we invest in training, beacon munich and, we try to help people see. We have their back. And they feel that. And i think that is important people today. Do you feel that the responsibility for companies has changed . That they have to give back . Jeff i do. Making money is usually important. What has happened from the day i there is anoday is identification and accountability around jobs. When i first started, you did not have to think that much about it. My dad worked for ge, so i always have an appreciation for a ge job. It is not that we are always creating and not have shut factories, but everyone is but everyone who is in Business Today has to know what their role is in the context of job ation, wages, and ways that is the Corporate Responsibility of 2017. It is job it is capability and job creation. John do you think there is life after ge . You talked between the link of business and politics. Would you go into public life that way . [laughter] jeff i thought you and i were friends. [laughter] i love my country. I really do. I love working for ge and have not given much thought about what i would do afterwards. Narrator our world today is wealthier than ever. But not everyone shares in this wealth. Todays young Business Leaders are challenging this, changing the way we think about money, its power and its purpose. This is a new generation. This is the new philanthropy. Narrator Alejandro Legorreta is one of mexicos most adventurous and innovative investors. But he isnt just investing in

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