The last talk of the day was with General Electric's Chairman and CEO Jeffery Immelt. He spoke about how GE manages to survive year after year. They do it by reinventing themselves constantly. I guess a good analogy for those pop culture lovers out there might be that GE is the Madonna of industrial companies. Immelt's talk was surprisingly frank.
He made several striking comments. One was:The customer isn't always right.Now, he doesn't mean that in the traditional sense, like GE tells their customers to buzz off if they complain about GE products. He means something more like, if consumers don't demand something that you want them to buy, then you have to kind of create that demand for them. An earlier speaker named Shai Agassi, the founder of a company called "Better Place" that produces clean energy vehicles and infrastructure has a similar view of the importance of creating demand for its products where demand has traditionally been weak.
So how does a company create demand? You can do that through advertising or propaganda. Another way might be through hiring good lobbyists in Washington to urge Congress to shape laws to benefit your products. Or if you're savvy, you might just be predicting that consumer demand will change.
You might think that GE focuses primarily on the last of those approaches. According to Immelt, one of these areas is cheaper healthcare equipment. He sees emerging markets like China and India having an enormous demand for such products. As these markets develop, healthcare becomes more important, but they will still be relatively poor and unable to afford much of the expensive equipment found in U.S. hospitals. Here, they foresee future demand, so they're investing in creating the products for it.
But then Immelt revealed another reason why GE has been so successful over the years. He said:
It's never been a free market; it's never gonna be a free market. That's just the way it is....MORE
Mr. Immelt spoke in a similar vein last quarter. Here's our March 5 post
"GE Finance Chief Says Market Fears ‘Overdone’ (GE)":
*The PR flack was quoted as saying:Seventeen months into the bear market, I may have lost it.
I saw that headline and the first thought that pops into my head is the title of Lynda Obst's book,
"Hello, he lied".
When GE joined the US Climate Action Partnership, with their bald-faced rent-seeking, I chalked it up to the machinations of folks not creative enough to compete without perverting the political system.
When GE lobbied for the incandescent light bulb ban (which bulbs were manufactured in the U.S.), their replacement being compact fluorescent bulbs manufactured in China, I thought "these people are scum".
When they applied for (and received) a grant from the state of Connecticut to install GE solar panels on GE headquarters*, I thought "Okay, lower than scum".
When I saw this, from Mr. Immelt (via Environmental Capital):I believe we are going through more than a cycle. The global economy, and capitalism, will be “reset” in several important ways. The interaction between government and business will change forever. In a reset economy, the government will be a regulator; and also an industry policy champion, a financier, and a key partner […] I think this environment presents an opportunity of a lifetime....I realized these people are nothing but fascists and it was time to stop being charitable.
Here's the headline story from the New York Times' DealBook blog.
Here's another quote that came to mind, we last saw it in our post "10 Ways the World Could End and How to Play Them":"He lied like a finance minister on the eve of a devaluation"I'm thinking it might be a good idea to read up on Mussolini for tips on making money off the corporativismo.
-Warren Buffett
It looks like the U.S. taxpayer is going to be asked to bail out GE Capital.
Why do I think that?
GECC credit default swaps steady at 15.5 pct upfront
That's $1,550,000 upfront plus $500K/yr to insure $10 mil. for five years.
$4 to insure $10. You tell me.
“It’s a good demonstration project for the technology,” O’Toole said.
Asked why a large, profitable corporation like GE would need financial help from the state, O’Toole said one reason “is to show you have to invest in new technologies. Companies cannot do it alone.”
In other GE news, spokesmen did comment on whether PR spin could be harnessed as an inexhaustible and eternal source of power.
