Jeffrey Immelt, chief executive of General Electric, is in town for a big conference the Atlantic is hosting on the future of manufacturing. He sat down with a small group of reporters this afternoon. Tune in tomorrow for more about manufacturing productivity and competitiveness, but in the meantime I asked Immelt about how Washington fiscal brinksmanship is affecting GE's business decisions and the economy.
The short answer: Maybe not all that much. At least for big companies like GE.
His views seem consistent with the story painted by recent data: that standoffs over the fiscal cliff and now sequestration and the potential for automatic spending cuts at the start of March haven't been an economic disaster. Corporate America — and Immelt in particular — seem to have become accustomed to this reality and aren't panicking over each sign of progress or stalling in Washington negotiations.
"Look, Certainty is better than uncertainty. . . . I’m rooting for this to get resolved, for the two sides to work together and resolve this. But I’m preparing the company for the fact that it doesn’t get resolved. I've prepared GE for volatility. It doesn’t really change the way we invest.
We’re in long cycle businesses. People are going to be using our jet engines for 40 years. So I can’t afford to say ‘I’m going to stop all my R&D on locomotives until I get certainty.' I don’t have the luxury to do that.
Who it really hurts are small and medium businesses. I was in Philadelphia yesterday and had lunch with a bunch of mid-market customers down there, customers of GE Capital. They say ‘What’s happening? What should we do?' That’s ultimately who the burden of uncertainty falls most severely on are the small and medium businesses.
I don’t have the luxury. We make stuff where we have to keep powering through. Like I said, we’re prepared for volatility. But if you look at our R&D spending this year, it’s going to be higher than it was last year, and that was higher than the year before. If you look our [capital expenditures], it’s going to be probably higher than it was last year and higher than the year before. Because we want to win. We want to keep going.
All that said, make no mistake, certainty is better than uncertainty. We would love for there to be high visibility in terms of the debt limit, sequestration and all those things."