Friday, June 26, 2009

SUSIE GHARIB: General Electric said today it plans to open a research center in Michigan creating 1,200 jobs. It's a bright spot for the Michigan economy where unemployment is now 14 percent, the highest in the country. Earlier today I talked with Michigan Governor Jennifer Granholm and GE's CEO Jeff Immelt. My first question to Immelt, why is GE hiring now?

JEFFREY IMMELT, CHAIRMAN & CEO, GENERAL ELECTRIC: Susie, we've had to restructure going through this economy just like other people have. But I'm firmly convinced that this is also a time to make new bets, make new investments. You've seen us do that in health care, information technology and other places. And in these areas like aviation manufacturing, energy manufacturing, software, hard grid and health care information technology, these are good areas for us right now, even in this economy and so we think this is a smart investment made at the right time.

GHARIB: Governor Granholm, this must be great news for the state of Michigan. Do you see any signs of stabilizing in the state's economy or are things still pretty bad?

GOV. JENNIFER GRANHOLM (D) MICHIGAN: Well, clearly with General Motors still in bankruptcy, they haven't emerged yet in the supply chain to the automotive industry responding to the fact that many of these factories are in hibernation. We're going to have a rough summer. But the whole point right now is to invest in the areas that you know will make your state stronger in the long run. And so while this is a tough period and we know it, the fact that General Electric, for example, has decided to invest in a facility that really will take care of those, many of those engineers who are working on building the next engine while they are easily recruitable for this particular facility, these are going to be high paying jobs focused on areas that the automotive industry has been focused on. So it's very exciting for us as we diversify into technology, alternative, renewable energy, as well as holding onto that automotive base.

GHARIB: Jeff, as you look around the country, are you seeing any improvement in business activity that gives you confidence about the overall economic outlook?

IMMELT: You know Susie, what I would say, first thing is the emerging markets are strengthening, so China, India, Brazil, Middle East, these places are actually getting stronger. The capital markets are getting better and the service businesses are strong. But some businesses are still tough. Our clients' businesses, the industry in the month of June is probably down 12 or 13 percent versus last year. So our focus right now is on exports, business investments, services. We think those are the places that are strong even in a bad economy, that where GE has got a great position.

GRANHOLM: What we're interested in building those products here so they can export them elsewhere.

GHARIB: So governor, based on what Jeff is saying here, what is the best hope for Michigan? What new industries can you transform into given the effects of the auto industry?

GRANHOLM: What we are really focused on is alternative and renewable energy. We know the president is going to be negotiating with Congress a climate change bill. That climate change bill if it has a renewable energy standard, it will create a demand for the products that General Electric, for example, makes. We want to build those products in Michigan. We know that if we are shrewd about restructuring the auto industry, making a vehicle that's an electric vehicle will require a battery, the guts for that electric vehicle. That next generation battery, we're going to build that in Michigan. We also have focused on life sciences, on the film industry. We've added new sectors to our economic table to make us more diverse and we've been very shrewd about counting on experts to tell us what are our natural niches given our geography and our history with the auto industry.

GHARIB: Jeff, you've been talking a lot recently about how businesses need to reset, that they can't go back to business as usual. How does the announcement or does the announcement today fit into your definition of this new normal?

IMMELT: It really does, Susie. Again, I think it's businesses are going to have to invest through this downturn, in other words, we're not going to get an economic recovery unless businesses are willing to take new risks, so that's one part of it. Another very important part is that I'm a global CEO, but I'm also an American and I think people are going to have to reinvest back in the U.S. This has got to be an export country and this has got to -- you got to be a country that's good at manufacturing and exporting. So I think that's another part of this new normal about how you position the U.S. in a very dynamic global economy and this has got to be a big part of it.

GHARIB: Governor, as you're trying to reposition the state of Michigan, what is the Obama administration doing to help you out?

GRANHOLM: Well, for example, the Obama administration has put into the recovery act the ability to vie for grants for batteries. So we want to make sure that we're the place that gets that. We've teamed up with Ford, General Motors, Chrysler and Dow and four battery companies to make an aggressive pitch for that. The Obama administration is going to be investing significantly in the smart grid. That's what General Electric is focused on as well. The manufacturing and research and development related to that, if we have a commitment on the part of the nation to be independent of foreign oil and energy independence, we've got to be producing that stuff here in the United States, everything from for example, the recovery act is investing in high speed rail. High speed rail cars right now are all manufactured in Europe or in Canada. We have a buy American sort of preference in the energy bill or in the stimulus act, we need somebody to manufacture those cars, those rail cars, in the United States. Why not in a state that's used to manufacturing things that move.

GHARIB: Thank you so much both of you for your time. Governor Granholm, Jeff Immelt, appreciate it.

GRANHOLM: Thank you, appreciate it.