In an exclusive interview to NDTV, Jeffrey Immelt, CEO of the $180-billion American giant GE, says he is paranoid and is gearing up for any eventuality.
GE has already raised $15 billion in the past few weeks, but says in these volatile times, one just has to expect the unexpected. NDTV's correspondent Shweta Rajpal Kohli caught up with him at GE's global headquarters in Fairfield, Connecticut.
Excerpts from the interview:
Tough time for the financial industry and the American economy. How badly is the crisis impacting GE?
There are two things going on. One, there has been a real shock to the financial system that has led to a liquidity issue across the global economy.
The financial services industry has really been in a tough phase and our financial services business has reflected that. The industrial economy is still okay.
If you're an exporter, like we are, there are still pockets of growth. But the concern that everybody has is what comes after this financial crisis, with the US economy going into recession.
What's going to happen with the global economy and so we are all very cautious about that in terms of what happens next.
So, is America in a recession already?
There is a definition of recession, which is two successive quarters of negative growth. I always think it's hard for a CEO to be an economist. But if we are not in a recession, we're in something a lot like one.
There is no doubt that the US has to be ready for a couple of quarters of very difficult economic growth led by the consumers.
Consumers have been a very big engine of the economy here.
Consumer spending has declined this quarter, last quarter.
Going forward, is GE reducing dependence on finance arm?
Nobody likes a bad market when you're in it. Financial services is a great industry and it goes through its cycles. We've already said it's (finance business) going to be 40 per cent of the company.
But I don't think it's not going to be zero . . . it's going to be a lower percentage . . . that was already the strategy we were embarking on even before the crisis hit and we will continue to move on with that strategy.
As someone who heads one of the world's leading companies, what do you think is the way forward from this crisis?
I just think you've got to have contingencies all the time. You've got be very aware that you have to be ready to change in a moment's notice.
The advantage we have is that we have a great team, great group of people, good balance sheet, good brand. But these are, I think, the most volatile times any of us have seen and have probably existed in decades. You just have to expect the unexpected.
You've said companies need to be able to change in a moment's notice. How is GE working to change so quickly?
Who would have ever thought six months ago that something will happen with Fannie Mae, Freddie Mac, AIG, Lehman Brothers? I just think you should not be trapped by these events. You've got to continue to move aggressively to protect your future . . . and that's what we are always willing to do.
GE has already raised $15 billion in equity capital. Are many such steps expected?
I don't want to talk about all of them. Some of them are proprietary. You don't know what's going to happen next. We always plan for the long term and we will always protect the company.
We are ready to go whatever direction we need to go.
Your shareholders are worried about the future. How are you assuring them that the company is safe?
We are one of the few triple-A rated companies in the world. That's a pretty good place to be in ... we've raised $15 billion. We've got a good investor base and I think we're pretty good.
The crisis reached its peak with Lehman Brothers going bankrupt. Do you think the worst is over or is it yet to come?
I don't know. I think what we've learnt is making us feel like it is dangerous. I am paranoid and we are ready for whatever eventuality that might take place.
One of the things what we've learnt in the last six weeks is that anyone who thinks they can predict the future is almost certainly wrong. That's the best lesson of all.
You said you're paranoid. What are your worst fears?
I think, as a leader, you just have to keep going forward. You've got to do what you can. Take care of yourself physically when you go through times like this.
I love the company and I love the team. I have no fear about where we are and what we have to do. I am pretty cool from the stand point of being focused on what we have to do.
But in these times of crisis, will GE be able to sail through?
We're a $20-billion company this year and that too in a recession. That's pretty good. The other things have a way of sorting themselves out.
You've been heading GE for seven years now. Is this the toughest phase of your career?
Oh sure! By far, that would be true if I were leading GE for 70 years. You have to go back to 1920s and 1930s to find a time that had this much going on. This rapid of a fire. This is just a very unique moment in time.