How does GE’S international strategy help in USA?
Global operations exec John Rice spells it out
This is the first in a series of occasional interviews with top executives about global competition and the lessons they’re learning as their companies expand in new international markets. This month, John Rice, vice chairman and head of global operations for General Electric, talks about his recent move to Hong Kong and how GE’S international strategy benefits its U.S. operations. His answers were edited for clarity and space.
Q: GE is moving key executives to emerging markets, and as part of this, transferred you from Atlanta to Hong Kong last year. Why the focus on emerging markets?
A: The focus is actually broader than emerging markets because we find growth and opportunities in a lot of places. Among the countries that we care about in addition to the U.S. and Western Europe are countries like Australia and Canada, where we’ve seen significant growth the past few years . . . driven in part by our participation in the
mining and mineral industries.
Q: GE is one of the USA’S largest exporters. How much will GE’S exports grow in a couple of years?
A: We have no specific target for exports, but we have a specific target for revenue in the growth countries. We think we ought to be growing this year and beyond at double-digit rates. Now that will help us export more from the United States and other developed countries and also create jobs for our supply base in the U.S. and other developed countries.
Q: You’ve overseen GE’S global energy, health
care, aviation and transportation businesses. How is this challenge different?
A: This opportunity is about helping us become the very best global company that we can be. The art and science of that is having these big, broad, global businesses — the aviation business which manufactures jet engines, the energy business which manufactures an array of products and services, the rail transportation business that’s becoming much more global — and making them local. It’s about finding that balance.
Q: Will GE’S international expansion lead to fewer jobs in the U.S.?
A: No, it should not. Our global businesses I mentioned — gas turbines and locomotives and jet engines — support thousands of jobs in the United States. As we’re more successful, we’re going to be protecting those jobs, and adding to them. Competency trumps costs. So you can manufacture things in places where your labor costs are higher than they might be in other markets, providing people are really good at it. Alternatively, if you’re doing stuff anywhere in the world and not good at it, those jobs are at risk.
Q: Which GE business has the most near-term growth potential in the markets you oversee?
A: If you look at today’s world, there’s a billion and a half to 2 billion people that lack very basic things: access to clean water; affordable, reliable power; basic health care; and any form of transportation, be it rail or air. And that situation is going to have to change. These are the areas where we’re going to find lots of growth going forward, because those problems are going to have to be fixed.
Q: China is the world’s fastest-growing market for aviation, energy, transportation, health care and financial services. In China, which area holds the most promise for GE and why?
A: Our health care, aviation and energy businesses had terrific results in China. The reason is because we understand that operating successfully in China in some cases requires a different model. We have some 30 joint ventures in China. There are some people who say that in doing (these joint ventures), we are selling out. We say, “Absolutely not.” People want to talk about companies’ risk of doing business in China . . . about intellectual property protection, this concept called indigenous innovation. And the question they don’t ask that they should is, “What’s the risk of not doing business in China?”
Q: What is one mistake that GE has made as it has expanded overseas?
A: Making sure that big people are where you need them to be — we’ve been slow to do that up until now. That is one of the things we’re trying to change.