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TORONTO — In his global travels as chairman and CEO of manufacturing giant General Electric Co. (GE-N20.070.120.60%), Jeffrey Immelt has heard all about the “resource curse.”
He’s heard it in Brazil, in Australia, in Russia – wherever a country’s natural resources boom is casting a shadow over domestic manufacturers. And meeting with business leaders in Toronto this week, he heard it again.
Mr. Immelt has closely followed the debate that has erupted in this country about the uneven benefits of the natural resources boom. Many worry that relentless demand for Canadian energy, metals and other resources is undermining the competitiveness of the manufacturing sector by driving up the Canadian dollar and making goods here more expensive in global trade. The higher currency only adds to long-running pressures that threaten manufacturing jobs in North America in a world of global markets and abundant, cheap labour.
“Everybody is challenged by the same thing,” Mr. Immelt said. “And that is: How do we take the wealth of natural resources and create industry and industrial jobs for the rest of the country?”
Mr. Immelt presides over a manufacturing colossus with nearly $150-billion in annual revenue, including a significant amount tied to the global commodity boom through equipment made for the oil and gas industry and other resource sectors. Now GE is targeting Canada’s booming oil sands as a key market for its industrial products.
The CEO spent two days in Toronto this week, where he met with his Canadian staff and his customers, and delivered a keynote address to an elite audience at the C.D. Howe Institute’s patrons’ dinner. He also sat down with The Globe and Mail for an exclusive interview.
Mr. Immelt has a message for those who think the resource curse will smother manufacturing in Canada.
First, far from being cursed, Canada is in an enviable position with its resource bounty, and the higher currency will not stop GE from adding workers to supply the resources sector.
And second, manufacturers can thrive in North America – and in Canada specifically, Mr. Immelt said, if they follow today’s prescription for success. They must focus on productivity and invest in training and R&D. Governments need to keep taxes low and the regulatory burden light. And workers must re-adjust their expectations about wages.
The son of a former shop steward in a GE aviation plant in Ohio, Mr. Immelt has a personal stake in the issue – both in his leadership role at the global company and as chairman of U.S. President Barack Obama’s advisory council on jobs and competitiveness.
“We believe in manufacturing,” Mr. Immelt said.
“There are two things that create manufacturing jobs: One of them is super high-tech products like jet engines that we can manufacture very competitively anywhere in the world and particularly in North America. And the other is competitive wages.”
For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/globe-investor/jeffrey-immelt-has-a-cure-for-canadas-resource-curse/article2387854/