Jeffrey Immelt, General Electric chairman and chief executive officer, had a word of advice for risk-averse companies sitting on a lot of money: don't.
The leader of one of the nation's largest companies said corporations that wait for the financial picture to settle in Europe, the economy to turn or for clarity in the race for the White House before spending will be trampled by those willing to take risks.
"In a world with no tailwind, if you're running a company and you're not investing, you're going to get crushed," he told local business leaders Wednesday at an hour-long, question-and-answer session sponsored by the Metro Atlanta Chamber.
"It's not like you're going to wake up [on] November 2012, with the election just having taken place, and all of sudden the economy is going to be at 5 percent [growth]," he said. "I don't think that's how money works. I think we're in a slow steady improvement."
Immelt, also chairman of President Barack Obama's Council on Jobs and Competitiveness, said companies have held back on spending because they were unnerved by the 2008 financial collapse. Yet on Tuesday, The Wall Street Journal reported that GE was among them, sitting on $91 billion at the end of the second quarter, partly to convince investors of its finance unit's soundness.
However, Immelt said GE is now investing and business is in better shape than the nation's sour confidence numbers would suggest, and now is not the time to stand on the sidelines.
"Personally I think the real economy is a lot better than how people feel right now," he said. "Outside of the housing industry, business is robust. There is business out there to be had."
Immelt shared his thoughts on the following questions submitted by Sam Williams, chamber president:
Q: Do you think this is the new normal?
A: Yes. Interest rates are at zero, the advent of China, India, the global economy, the world at war, the toxic mood that the country's in. This is a different day. And I think people who don't feel like this is a different day are going to lose.
Q: Some people would say that we spent so much time over the last 10 years on terrorism, on military activities, where we really took our eye off the economic ball, and that ball bounced out of our territory and into China, India and Brazil and other places. Do you see that?
A: I see some truth in that. We have a new set of competitors and the bad news is they have moved faster than we have as a country over the past decade. If we want to win, we'll have to figure out ways to move faster.
Q: Over the last decade, are there strategies that didn't work at GE that you would change in hindsight?
A: The big thing I wish we could have done over was the day Lehman Brothers went bankrupt, GE Capital was just too big in the context of GE. We were highly rated and had good financial strength, but any financial company that big on that day was going to have some sleepless nights. If I had one to do over again, it would have been to ask questions and just have it be smaller in the context of GE.
Q: How did you make the decision to suspend dividends?
A: I never made a tougher decision in my life than cutting the dividends. I just can't describe how badly I felt. I felt like I let everybody down. But it was about safety of the company. We hadn't cut our dividends since the Depression in 1934. It's a lynchpin to our investors, it's a lynchpin to our employees, it was a statement of pride. It was brutal.
Q: You have performed remarkably with profitability, but the market hasn't recognized that. Why?
A: Financial services have just gotten way out of favor. The fact of the matter is, we're never going to feel better as a country until we embrace the fact that we need an effective financial services industry. It might make us feel good to say, "Gosh darn, those guys on Wall Street, they screwed this whole thing up." The people we are scaring are in Georgia, Illinois, in the small business men and women who want to invest money, and when they hear people attack Wall Street, they think something is wrong with the financial system. That's not what we should be doing right now.
Q: How did you come about your decision on incorporating sustainability in your business?
A: These things go in and out of favor based on the economy. But any business person in this room that d0esn't think there is going to be either a limit on carbon or price on carbon some day, you're wrong.
Q: What is it like to work with President Obama?
A: I find him to be smart. I think he's listening. We have to keep pursuing those pro-growth policies that will create jobs and competitiveness.
