Corporations, Tax Credits and Outsourcing U.S. Jobs

Jeff Immelt, the head sled at GE, is kinda Obama’s Jobs Czar, heading the task force on jobs creation. Snort. OK. These impotent task forces are mostly symbolic — and they might even be somewhat useful if they occupy enough big chunks of the miscreant CEOs time so they don’t muck up their own companies or other parts of the economy.

But you can only stretch the symbolism so far — especially when, like Immelt, your company is outsourcing jobs to China and elsewhere and striking joint-venture deals with advanced technology on the line that might give foreign companies a competitive edge for decades to come.

Here’s from a WaPo article “GE ‘all in’ on aviation deal with China“:

GRAND RAPIDS, Mich. — At a General Electric flight simulator here, the visibility has been set at near zero to mimic thick rain and clouds. But a video console near the pilot shows a vivid picture of nearby mountains precise enough to allow a plane to take off or land despite the conditions.

The system is one of several highly valuable next-generation technologies that GE has developed — and that the company has passed along to China as part of a joint venture with the state-owned Aviation Industry Corporation of China (AVIC).

Access to the world’s second-largest economy is critical for nearly any global company. Yet this often comes at a cost: the transfer of the very technologies that leading business officials — including GE chief executive Jeffrey Immelt, who heads an Obama administration panel on U.S. jobs and competitiveness — cite as essential to the United States’ economic future. The “synthetic vision” system, for example, could be worth millions of dollars to airlines, which could significantly reduce costs from weather-related delays.

GE, like other companies, must weigh which technologies should be brought to joint ventures with China and how to protect them from being stolen or misused. These decisions face virtually any executive trying to develop a presence in the country — from the most sophisticated technology firms, which worry about software piracy, to old-line industrial equipment makers, which have seen knockoffs of their products pop up soon after making deals with Chinese partners.

Under the agreement with AVIC, GE avionics will be on board a new Chinese commercial airliner that is likely to become a rival to aircraft produced by U.S.-based Boeing and Europe’s Airbus. The potential competition with Boeing, coming at a time when the United States is fighting to maintain its own manufacturing base, has stirred some American criticism.

But GE executives say they have had no second thoughts. China’s airplane market is booming, and the deal was too important to pass up, they said, even at the cost of sharing the avionics technology.

“We are all in and we don’t want it back,” said Lorraine Bolsinger, chief executive of GE Aviation Systems. She said new airplanes don’t come along that often, and that the chance to be part of developing a major new aircraft is not to be missed — even if most of the jobs will be in Shanghai or elsewhere in China.

“We don’t sell bananas,” she said in an interview here. “We can’t afford to take a decade off.”

But American business leaders wonder privately whether companies such as GE are at risk of giving up long-term strategic advantages when they agree to technology-transfer deals for shorter-term gain.

OK. We get it. GE “don’t sell bananas.” And multinational corporations, to paraphrase Mitt Romney, are just people trying to make as many bucks as possible regardless of where the bucks come from.

But here’s the rub. If U.S. corporations get — and want more — tax incentives for job creation, shouldn’t they disclose where they are actually creating jobs. Some do. And GE to its credit is one of them. But many do not.

Here’s from WaPo, “Corporations pushing for job-creation tax breaks shield U.S.-vs.-abroad tax breaks“:

Some of the country’s best-known multi­national corporations closely guard a number they don’t want anyone to know: the breakdown between their jobs here and abroad.

So secretive are these companies that they hand the figure over to government statisticians on the condition that officials will release only an aggregate number. The latest data show that multinationals cut 2.9 million jobs in the United States and added 2.4 million overseas between 2000 and 2009.

Some of the same companies that do not report their jobs breakdown, including Apple and Pfizer, are pushing lawmakers to cut their tax bills in the name of job creation in the United States.

But experts say that without details on which companies are contributing to job growth and which are not, policymakers risk flying blind as they try to jump-start the hiring of American workers.

“It’s an important piece of information that the American people should have,” said Ron Hira, an associate professor of public policy at the Rochester Institute of Technology. “Should you listen to the kind of advice these companies have about how to grow the economy when their record and their model indicates they’ve cut jobs? . . . Or should we talk to people who actually do create jobs in the United States?”

As the country faces an unemployment crisis, President Obama, lawmakers and business lobbyists have all touted the country’s biggest companies as critical to creating jobs.

The head of Obama’s jobs council, General Electric chief executive Jeff Immelt, said during a tour of a company plant in Greensboro, S.C., that firms should be ready to answer questions from the public.

“If you want to be an admired company, you better know, you better have accountability, and you better think through where the jobs are,” he said.

GE breaks out its employment numbers in company filings to the Securities and Exchange Commission. In 2010, about 46 percent of GE’s 287,000 employees worked in the United States, compared with 54 percent in 2000.

But many firms, including some whose executives have counseled Obama on the economy, do not put their number of U.S. workers in their annual reports.

IBM chief executive Sam Palmisano has met a number of times with the president, most recently in July at a lunch with other executives to talk about jobs and the economy. IBM stopped giving its U.S. head count in 2009.

“We just made a policy that we would only break out global head count,” said company spokesman Doug Shelton.

Data from before 2009 showed IBM rapidly shifting workers to India. Dave Finegold, dean of the Rutgers School of Management and Labor Relations, estimates that 2009, when the company stopped sharing its U.S. employment figure, also marked the first time the company had more employees in India than the United States. Finegold based his number on reports from the media, third-party groups and former employees who have tried to track the number.

And more:

For chief executives of multinational companies who are used to answering only to their shareholders, the country’s jobs crisis has uncomfortably switched the political spotlight onto their decisions about who they employ and where. It has also thrown into relief the fact that when U.S. multinationals chase profits and hire workers anywhere in the world, they become less tied to any one country, including this one.

Immelt acknowledged last month that the health of a company such as GE is now less connected to the U.S. economy, but he added that companies including GE “got carried away” with outsourcing. “I’m a GE leader first and foremost,” he said. “At the same time . . . I work for an American company.”

Well, big guy. It’s all about jobs. And I expect American taxpayers would like to see jobs stay and be created in the USA. I expect that’s why the Prez made you the Jobs Czar.

 

 

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One response to “Corporations, Tax Credits and Outsourcing U.S. Jobs

  1. The end of manufacturing stops of the regular bulb Jan 1st, 2012 also.

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