The View From 1776

At the outset of the 1930s Depression, General Electric president Owen D. Young was among the heads of major corporations who advocated more government controls of wages and prices to help big business regain its economic footing. 

Since the days of the railroads, the first great, interstate corporations, many of our largest corporations have maintained an uneasy, often close relationship with the Federal government.  Large, interstate corporations prefer working with a single set of national regulations, rather than with 50 different sets of state regulations.  Their smaller competitors are less able to bear the monstrous compliance costs that result.  Business that are big enough, as we have seen, can secure special financial and regulatory dispensations from the Federal government.

Just as Wall Street clamors for the Fed to flood the market with yet more fiat money to inflate the stock market, General Electric wants special favors from the government to give it competitive advantages, as reported in the Wall Street Journal.

SEPTEMBER 23, 2010, 4:11 P.M. ET
GE CEO Says U.S. Is Falling Behind in Energy

By PAUL GLADER

General Electric Co. Chief Executive Jeff Immelt warned that the lack of a comprehensive U.S. energy policy and the “stupid” current structure of the industry are causing America to fall behind in new energy fields.

In sharply worded comments at an energy event in Washington, Mr. Immelt on Thursday praised China’s approach to energy and criticized what he called a stalled effort to revamp U.S. energy policy. The remarks came as GE is facing tougher competition around the world from rivals in the markets for renewable and nuclear energy that the company believes get more help from their governments.

“The rest of the world is moving 10 times faster than we are,” Mr. Immelt said, referring to the U.S. during a speech at the Gridwise Global Forum. “This is a great country. But, you know, we have to have an energy policy. This is just stupid what we have today.”

The head of the Fairfield, Conn., conglomerate said China is moving faster to develop clean technologies such as nuclear power, electric vehicles and wind power. He also said China has the right mix of a big local market, innovation in technology, a low-cost supply chain and government policy support. China’s State Grid utility, he said, is larger than nearly all U.S. utilities combined.

Meanwhile, Mr. Immelt characterized the energy regulatory system in the U.S.—split between federal and state authorities—as “a relic of 1860 or something” and said “it has fundamentally no basis in the modern world.”

Countries such as Canada, Australia and China have much simpler regulatory structures for energy and are moving more quickly, he said. The U.S. must decide, he said, if it is serious about updating the 100-year-old “antiquated [power] grid” and whether the much-talked-about “smart grid” is “a hobby shop or a real business.”

GE has long expressed frustration with what it sees as a lack of government support for new energy technologies in the U.S. and for sales of nuclear power and other technologies overseas. The conglomerate’s nuclear unit has won little business in the current round of reactor development around the world, and its wind-power unit faces heavy competition from Chinese manufacturers.

China could spend billions on advanced electricity transmission and distribution systems—collectively known as smart-grid technology—but GE will face competition from State Grid, which is shaping up to be a rival producer as well as the country’s main customer.

Mr. Immelt’s comments appeared aimed at prodding the Obama administration, Congress and public toward action, particularly in areas where GE does business. But not all competitors and peers share his viewpoint.

“It’s easy to point in all directions,” said Guido Bartels, general manager for global energy and utilities at International Business Machines Corp., which sells software and services to help upgrade power grids. “We just need to step up to the plate.”

Energy Secretary Steven Chu acknowledged the need for an overhaul, but said the administration is working meanwhile on steps like funding clean energy technology and research. “We are not going to sit idly by,” he said in an interview at the session.

Mr. Chu, however, said a completely centralized model like China’s would hurt innovation. Laura Ipsen, general manager for smart grid at Cisco Systems Inc., agreed. “There are some potential downsides to having one national utility,” she said in an interview, including overcommitting to what turns out to be poor technology. Cisco hopes to sell $15 billion to $20 billion of grid-related equipment in the next seven years.

Mr. Immelt on Thursday repeatedly talked about nuclear power and how the U.S. has failed to maintain and expand its nuclear industry. “There should be a nuclear renaissance in this country,” he said. “The nuclear industry is here because government supported it in the United States. This notion that government is not a catalyst in this industry has no basis in fact.”

He joked that the nuclear industry’s “most important output these days is press releases.” He said most Americans probably don’t realize the U.S. is building only one nuclear power plant, and at a slow pace, while the rest of the world is building nearly 50.

He also said most Americans don’t realize how slowly the U.S. is moving on electric vehicles, “clean coal” plants and other technologies. “That’s kind of the state of play,” he said.

On another front, Mr. Immelt said GE in the past aimed to produce only “quality, expensive, high end” products to sell around the world, but that strategy is changing in nearly every product from wind turbines to medical scanners.

“Now, I want to occupy every corner of an industry. I want to have the value product all the way up to the high-end product,” he said. “We don’t want to give any space to a competitor” from places like China and India.
Write to Paul Glader at paul.glader@wsj.com

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