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Immelt to head new advisory board on job creation; Volcker to step down

By Perry Bacon Jr. and Zachary A. Goldfarb
Washington Post Staff Writers
Friday, January 21, 2011; 5:32 PM

SCHENECTADY, N.Y. - President Obama launched an initiative Friday to spur U.S. job growth and global competitiveness, assigning those missions to a new economic advisory council and tapping a prominent, export-oriented business executive to head it.

In announcing the appointment of General Electric chief executive Jeffrey Immelt to chair the council, Obama hailed him as an innovator who can advance the administration's goal of dramatically boosting U.S. exports as a way to create jobs.

In remarks at a GE plant in this city, the industrial giant's birthplace, Obama said Immelt "understands what it takes for America to compete in the global economy."

Immelt will lead the President's Council on Jobs and Competitiveness, which is replacing the Economic Recovery Advisory Board that Obama created two years ago to help guide the government's response to the nation's economic crisis.

Obama said the new council reflects his administration's shift in focus from steering the nation out of recession to "putting our economy into overdrive."

The recovery board has been chaired by former Federal Reserve chairman Paul Volcker. In a statement, Obama announced that Volcker will step down next month from his role advising the administration.

"For America to compete around the world, we need to export more goods around the world," Obama said after touring the GE turbine plant with Immelt. "That's where the customers are. It's that simple." He said his goal of doubling U.S. exports in five years is "on track," adding: "We're already up 18 percent, and we're just going to keep on going."

"We want an economy that is fueled by what we invent and what we build," Obama said. "We're going to build stuff and invent stuff. Now, nobody understands this better than Jeff Immelt."

By turning to Immelt, Obama chose one of the most prominent corporate chiefs in the country and a self-described Republican. Immelt's vocal support could prove helpful to Obama as he negotiates with the new Republican majority in the House over deficit reduction, jobs programs, the health-care law and regulation.

Immelt also bolsters Obama's business bona fides, following a string of recent appointees who had worked in corporate America. They include William M. Daley, a former J.P. Morgan Chase executive who was named White House chief of staff, and Gene Sperling, who formerly worked for Goldman Sachs and was appointed to head Obama's National Economic Council.

In his speech in Schenectady, the president repeatedly highlighted the issue of competitiveness, a major new theme that the administration has rolled out over the last several days and one that will be featured prominently in Obama's State of the Union address next week. He said it was critical that U.S. companies are innovative enough to sell their goods abroad and therefore create jobs at home.

Volcker, 83, at times expressed frustration with his limited ability to influence economic policy within the administration. And his ideas were generally not embraced by the White House economic team until the president endorsed his idea to limit the activities of major Wall Street firms - the so-called Volcker Rule.

By picking Immelt to lead the new outside economic advisory board, Obama has selected a titan of American commerce who has emphasized the importance for U.S. companies of selling into emerging markets but who has also overseen a difficult tenure at his own firm.

Immelt, 54, has served as chief of GE, one of the world's largest companies, since September 2000. He replaced Jack Welch, who was widely regarded as a masterful executive and manager. Since then, Immelt has helped deepen GE's footprint in places like India and China.

But the company has still struggled, losing more than half of its value since Immelt took over. Most of that decline came during the financial crisis as the company's finance arm, GE Capital, suffered huge losses on loans and required financial aid from the government.

The economic advisory council's new leadership and mission reflect the administration's shift from trying to halt the recession to broader efforts to improve the U.S. economy and create jobs. Administration officials did not say who else would join the new council.

"In the coming days, we'll be announcing the business leaders, the labor leaders, the economists and others who will join with Jeff to help guide us into that overdrive mode," Obama said in his speech.

Immelt has long served as an informal adviser to the administration on business issues and sat on the board that Volcker chaired. In an op-ed in The Washington Post on Friday, he highlighted free trade, innovation and exports as among the priorities of the new council.

"It is possible to be a competitive global enterprise and still care about your home," Immelt wrote. "Persistent and high unemployment - and the pessimism it breeds - should not be accepted. We must work together to construct an economy that creates more opportunity for more people."

In a call with investors to discuss GE's fourth-quarter results, Immelt said his commitment to the company would not change with his appointment to the economic advisory board, Bloomberg News reported.

GE "is my passion," Immelt said. "I'm focused on the company, but you know, at the same time, I'm honored to be able to work on something that has importance in a broader economic context."

Obama is renaming his outside economic panel to focus on one of the major challenges facing his administration - how to bring down the stubbornly high unemployment rate. The administration has grasped for answers without much success, and it now faces even deeper challenges with the change of power in the House and the renewed national focus on the long-term difficulties created by the massive and growing federal debt.

Business groups, which rigorously fought Obama's signature domestic achievements last year - the overhaul of health care and financial regulation - hailed the selection of Immelt but cautioned that they want the administration to follow up on the appointment with new policies.

"President Obama's appointment of Jeffrey Immelt to head the Council on Jobs and Competitiveness is a promising step toward a renewed focus on creating jobs, boosting economic growth and enhancing America's global competitiveness," said Thomas J. Donohue, U.S. Chamber of Commerce president and CEO. "The ultimate test will not be the administration's words and intentions, but its actions."

Before being tapped for his new role Friday, Immelt long supported Obama's work on behalf of American companies overseas. He joined Obama in India in November and participated in several events featuring Chinese President Hu Jintao during his state visit.

Last year, GE, an industrial giant that manufacturers jet engines, medical equipment and many other products, agreed to sell its perhaps best-known subsidiary - NBC - to Comcast.

Immelt served on the previous incarnation of the president's panel and on the board of the New York Federal Reserve Bank. He has focused on U.S. competition with foreign companies and the importance of clean-energy innovation, both areas of central concern to GE.

A native of Cincinnati and graduate of Dartmouth and Harvard Business School, he has worked throughout the conglomerate's business since joining the firm in 1982, including its plastics and medical businesses. He also served on the board of GE Capital. In 2009, Immelt received more than $5 million in compensation.

Immelt described the overarching goals of his tenure at GE in an interview with the Guardian newspaper last year. "We made two big bets," he told the publication. "One is that the emerging market consumer is going to replace the American consumer as the engine of growth for the next 25 years, so we make the infrastructure and technologies that are going to help that happen: electricity, aviation, transportation, etc. The other bet is that in the developed world there are a couple of big problems to solve, global warming and clean energy, and affordable healthcare."

GE is donating $10 million for celebrations of former president Ronald Reagan's 100th birthday. Reagan, who died in 2004, worked for GE early in his career.

"President Reagan helped our company expand its reach during a golden age of American technological progress," Immelt said in a statement in March. "He embodied the optimistic and innovative spirit of our company, and later successfully carried those qualities with him to the White House."

In 2008, Immelt donated $2,300 to Democratic presidential candidate Hillary Rodham Clinton and to the Republican nominee, Sen. John McCain (Ariz.).

baconp@washpost.com

Goldfarb reported from Washington. Staff writer William Branigin contributed to this report.

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