The most significant U.S. focused supply-chain related news of last week came on Friday. President Barrack Obama appointed General Electric CEO Jeffrey Immelt to lead a newly revised Presidential Council on Jobs and Competitiveness. The conservative leaning Wall Street Journal’s headline, President Tries the GE Way, reflects perhaps the general frustration among business leaders on whether the White House did not understand the needs of business in creating further job growth within the U.S..
Supply Chain Matters applauds this decision for a number of reasons, but will quickly add that one executive alone does not make for a comprehensive strategy of concerted action.
The formal announcement was made as the President was touring a General Electric factory in Schenectady New York that is building alternative energy related products. According to White House media briefings, this advisory board to the President is a successor to the President’s Economic Recovery Advisory Board led by former Federal Reserve chairmen Paul Folcker. Whereas that board was chartered with a focus on the previous financial crisis and avoidance of an economic meltdown, the current council is to be focused with finding new ways to foster private sector job growth and building stronger White House and legislative relationships with the broader business community.
Supply Chain Matters remains a fan of Mr. Immelt. In a June 2009 commentary, we noted how refreshing it was to hear a senior executive who understood the meaning of global manufacturing competitiveness and the important role that supply chain capability plays in supporting this capability. In 2009, Immelt was bold enough to suggest that U.S. companies may have outsourced too much, and turned over too many technological and intellectual property assets to foreign operations. At the time, Mr. Immelt expressed an opinion that manufacturing related activities should represent 20 percent of U.S. employment levels.
Already, concerns are being raised as to whether Mr. Immelt would use his new appointment to advocate for the business needs for GE, or perhaps advocate for more defense-related spending.
Of more interest, former Secretary of Labor Robert Reich penned two separate commentaries on The Huffington Post. The first, The Real Economic Lesson That China Could Teach Us, notes that China has a national economic strategy designed to make it, and its people, the economic powerhouse of the future, and that the U.S. lacks such a strategy. He goes on to state: “But the prosperity of America’s big businesses has become disconnected from the prosperity of most Americans.” Reich further notes: “China is eating our lunch. Why? It has a national economic strategy designed to create more and better jobs. We have global corporations designed to make money for shareholders.”
In a second related commentary, American Competiveness, and the President’s New Relationship with American Business, one other of his other arguments is that profits of U.S. based companies are soaring, largely because sales of their foreign-based operations are booming, and production costs in the U.S. have been reduced because of lower payrolls in the U.S. That statement is of little surprise to our Supply Chain Matters readers. Mr. Reich further argues that in the final analysis, profitability has little or nothing to do with the quality or quantity of jobs in the U.S., and perhaps there is an inverse relationship.
Somewhere in between lies a critical need for the U.S. to have some recognized economic strategy on global competiveness, manufacturing and supply chain capabilities that can lead the world. That need transcends one Presidential commission and one appointment to lead such a commission. Americans, their political leaders, and U.S. based corporations need to quickly move beyond the rhetoric and posturing to address some serious realities of why so many jobs have been lost and from where future job growth will come. That means some sacrifices for each stakeholder and perhaps additional needs for investment in infrastructure and capabilities.
We believe that somewhere in that discourse will come a reality that supply chain and manufacturing capabilities truly do matter.