Manufacturing is key to global competition

I was recently reminded of the value of manufacturing. A couple weeks ago, I spent some time in Mexico, observing our excellent operations there. Later, I was a speaker at Walmart’s summit on American manufacturing. There, we announced an initiative to increase our lighting share at Walmart and create new manufacturing jobs in the U.S.

Manufacturing is the new basis for competitiveness for industrial companies and, for that matter, for countries. The notion of manufacturing has changed. Today, materials decide the performance of our products. There are novel processes and capabilities, like additive manufacturing. High-performance computing opens the door for cycle-time reduction. Better labor relations on the factory floor have allowed for training and empowerment. And, entrepreneurs inhabit the manufacturing space like never before. Manufacturing is being digitized, decentralized and democratized.

GE is pioneering advanced materials and work-force training. We are making big investments at the Global Research Center in high-performance computing, novel processing and additive manufacturing. We are working with suppliers on cycle time and entrepreneurial behavior.

This requires us to think differently about the factory floor. I have seen three generations of manufacturing thinking at GE. The first (1980s+) really dealt with the difficult relations with our workforce and the need to compete. The second (1990s+) led with a desire to outsource. Every manufacturing leader became a sourcing leader. Today, our manufacturing leaders must exhibit process skills, technical innovation and entrepreneurship. They must leverage their teams. This requires new thinking.

Our goal at GE is to make products to serve our markets. Localization, innovation and materials are far more important than labor cost in our products. We need flexible people in supportive locations. We will grow our supply chain where we are growing our sales and our innovation.

Based on all of this, the geographic nature of manufacturing has changed. The notion that one or two countries will manufacture for the rest of the world is old thinking. Many places can compete. We must be aware of the fact that manufacturing competitiveness has become the key source of country competitiveness.

We must always challenge old-fashioned thinking. I find that our leaders can have a very old view of manufacturing. Today, there is more innovation in our plants than anywhere in our company.

Jeffrey Immelt is the chief executive officer of General Electric Co.