When President Obama tapped General Electric chairman and CEO Jeffrey Immelt to be his top outside economic adviser, my first reaction was: Really?
Maybe I'm partial to the auto industry, the industry I follow the closest, but my next reaction was: Was Ford CEO Alan Mulally's line busy? His email down?
Immelt took over for legendary CEO Jack Welch in 2001. And I've never been aware of a huge fan club for Immelt as a great CEO. According to published reports, though, he is very socially and politically connected, and has visited the White House some 16 times since Obama took office.
[Image: J. Scott Applewhite/AP]
By any measure, though, GE is part of the economic problem in the U.S., not part of the solution. The company is sitting on $79 billion in cash, the greatest amount by far among non-financial publicly-traded companies. GE's cash holdings are about 62 percent more than the number two company, Toyota. The Obama administration has been critical of corporate cash-hoarding. And we haven't heard anything from Immelt about what kinds of policies it will take to put that cash to work in the U.S., and create some jobs.
Since Immelt took over as CEO, GE has cut 34,000 jobs in the U.S., according to its most recent annual filing with the SEC. It has added 25,000 jobs overseas. At the end of 2009, GE employed 36,000 more people abroad than it did in the U.S. That is the flip-side of GE's job profile in 2000. Immelt is an adviser to do what?
The U.S. economy is a mess. Corporate America is not hiring. Something needs to be fixed. Enter Mulally. When the Ford CEO took over in 2006, Ford was a wreck. It hadn't made any money since 2000. The year the former Boeing Co. executive took over, Ford was on its second restructuring plan that year: "The Way Forward II." That was a bad time.
Mulally's greatest contribution to Ford's comeback, and the $6.6 billion profit it posted last year, is streamlining the organization and keeing everyone focused on the original plan. The old Ford might have stuck with a new plan for about eight months before executives who found it too difficult would start lobbying for a new plan. The plan Ford is following today is the same one Mulally had in the fall of 2006. In truth, Ford Americas chief Mark Fields did much to architect the plan before Mulally arrived. But it has been Mulally who gave it life and made it stick.
Ford avoided government bailout and bankruptcy in 2009. The company still makes most of its products sold in the U.S. in the U.S. Mullaly is a fixer and a focuser. He has the knack, say the people who work for him, for driving discipline into the rank and file like they have never experienced before.
It occurs to me that if the goal of the White House's economic policy is to put people back to work, Mulally would be a great catalyst for keeping the White House focused on exactly that, and relentlessly questioning how any new policy idea presented was going to impact that objective. As an experienced CEO, he will know the BS when it is presented by academics and policy wonks.
The naming of Immelt, too, reveals the political tin ear of the White House. GE is based in Connecticut, and Immelt is seen as part of the insular Eastern corporate establishment. Mulally is fixing Ford in the heartland of the U.S. in states – Michigan, Ohio, Indiana, Kansas, Illinois, Kentucky – that are not only hurting, but politically important for Obama in 2012.
Having been around Mulally for four years, my guess is that he didn't want that job anyway. But when the President calls, you answer. Too bad the call didn't come.
##David Kiley, an award winning journalist, covers the auto industry from Ann Arbor, MI. He has followed the industry for 25 years, and held posts including Detroit Bureau Chief for USA Today and senior correspondent for BusinessWeek. He is also the author of two books on the industry: Getting The Bugs Out: The Rise, Fall and Comeback of Volkswagen in America [John Wiley and Sons 2001], and Driven: Inside BMW, The Most Admired Car Company in the World [Wiley, 2004].