GE balances R&D commitments

06 March 2012

NEW YORK: General Electric, the conglomerate, is seeking to balance its approach to innovation, thus meeting the needs of international markets and its operations in the US.

"The fact is that we are - forevermore - going to play in a global economy, where competition is tougher, customers are more demanding, and the pace of change is faster," Jeff Immelt, GE's CEO, wrote in the Harvard Business Review.

In responding to this trend, Immelt suggested it was essential to forge a strong presence in countries able to deliver technologically-advanced items at the cheapest rate, "wherever that may be".

"So we will continue to source commodities and manufacture products abroad and to invest in our R&D centers around the world to obtain the lowest costs, access talent, and be near customers," said Immelt.

Immelt added that China has become a key rival to the US in terms of research of development due to a combination of these factors, and as the local authorities have focused on driving this process.

He said: "China is growing fast because it is investing in technology and has zero intention of letting up on manufacturing. We shouldn't be afraid of that; we should be inspired by the competition."

"This isn't bad for America. The fact of the matter is that thousands and thousands of US jobs exist because of our ability to compete globally."

However, alongside bolstering its position in emerging markets such as China and India, GE is heightening R&D and manufacturing levels in America, reflecting a belief in the country's core strengths.

This incorporates an $800m investment in its Appliance Park in Louisville, including developing new IT systems to make sure it has the most up-to-date capabilities.

Elsewhere, the company's aviation arm is also in the process of constructing a plant in Ellisville, Mississippi, which will cost an estimated $60m, and is expected to open in 2013.

"Still, today at GE we are outsourcing less and producing more in the US. We created more than 7,000 American manufacturing jobs in 2010 and 2011," Immelt said.

"Our success on the factory floor rests on human innovation and technical innovation - the keys to leading an American manufacturing renewal."

Data sourced from Harvard Business Review; additional content by Warc staff