By Matt Tomsic
Published March 14, 2013
The Lowcountry should target aerospace, health care and energy to keep improving its economy, said the CEO of General Electric Wednesday, and the region and state are benefiting because they already have presence in those industries.
Jeff Immelt (Photo/GE)
GE has a gas turbine manufacturing facility in the Upstate, and he credited the area for snagging another international manufacturer, the Boeing Co., in the Lowcountry.
“The 787 Dreamliner is an awesome airplane,” Immelt said. “It is going to be successful in the marketplace. This baby is going to really sell, and you’re going to be glad you’ve got it in your backyard.”
Immelt said the Lowcountry should build around the aerospace, health care and energy clusters.
“In some way, shape or form, South Carolina has a presence in each one of those industries,” Immelt said, referring to Boeing and the Medical University of South Carolina. Also, Clemson University is establishing a wind turbine testing facility in North Charleston, which will have some of the largest testing rigs in the world. “Aviation has got tremendous momentum globally. There’s going to be a revolution in energy, whether it’s renewables or gas.”
He said the U.S. economy is generally getting better, and the most important economic figure is Ben Bernanke, chairman of the Federal Reserve.
“I think that the leadership by the Fed has been the most important aspect of this recovery,” Immelt said. “The Fed probably today supersedes what’s going on with legislation.”
GE also sees international economies rebounding, though Europe is still struggling “somewhere between bad and terrible,” Immelt said.
About 5% of the world’s population lives in the U.S., he continued, while 85% lives in economies that are growing more than 6%.
“There’s a ton of growth out there,” Immelt said. “You just have to go chase it.”
GE is monitoring trends in natural gas, advanced manufacturing, localization and the “industrial Internet,” four trends he said offers opportunities for growth.
The world is seeing a revolution in energy and natural gas, Immelt said, during the next decade, and North America could become self-sufficient if Mexico, the U.S. and Canada cooperate. Immelt said Mexico and Canada have oil reserves while the U.S. has natural gas. If the region finds way to share and distribute energy, those countries could become energy independent.
“I’ve traveled the world,” Immelt said. “I’ve seen a lot of things. This can happen. We have natural resources today that we didn’t think about. A decade ago, no one would come into my office and talk about shale gas.”
Advanced manufacturing jobs are coming back to the country, he said, as companies learn they can build products anywhere. GE refrigerators take about two hours of labor, Immelt said, and if the company pays those workers somewhere in the teens per hour, they can compete with Mexico and other international countries. Labor is getting more competitive, he added.
“What you’re finding out is companies are really able to make things where they choose,” Immelt said. “And the desire is to be close to markets. That’s going to be good for the United States.”
Job relocations are driving Immelt’s third trend: localization. Companies aren’t chasing the lowest cost of labor anymore but are putting facilities near markets.
GE and other companies are opening more sites with fewer employees. Immelt said GE’s biggest orders from its Greenville facility are from Nigeria. In Greenville, the company makes gas turbines, all of which are exported, and since some of the largest orders are from Nigeria, the company performs 70% of the work in Greenville and the remaining 30% in Nigeria.
“This is going to be a big theme,” Immelt said. “I think the days of these huge megasites are slowly ending.”
Localization also works in reverse as some innovation will happen outside the U.S. but will be brought back to the states. Immelt said health care could benefit from international innovations, and he pointed to India as a place where medical devices cost less and health care costs are lower. He said a GE health care executive based there received her yearly physical for $250, while that same executive had the same yearly physical in the U.S. before for $2,500.
The fourth trend GE is monitoring is the “industrial Internet,” Immelt said. Analytics and software is invading the industrial world and has applications in manufacturing, health care, energy and transportation.
GE provides engines for the Boeing 777, and those engines have two sensors that take about two terabytes of data each year during the engine’s operation. If GE can use those analytics to find a way to save 1% of the engine’s fuel use, it could save airlines billions in fuel costs across the world.