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Jack Welsh, former chairman of GEC
Jack Welsh, former chairman of GEC

Please note "BBC Breakfast with Frost" must be credited if any part of this transcript is used

DAVID FROST: Of course the global economy has been badly hit by all of this, public confidence has been undermined, the recession looks a little nearer, one of America's greatest businessmen, Jack Welch, is passing through London on the occasion of the publication of his autobiography here, Jack, you spent the last 20 years running the world's biggest most valuable company, or that's what he made it, GE, General Electrics. Jack, welcome.

JACK WELCH: Thank you for having me David.

DAVID FROST: Let's me start with what we've just been talking about, you were, on the tragic day on the day of September the 11th, you were in New York that day Jack, weren't you?

JACK WELCH: Yes I was, I was there and I was on the Today show as a matter of fact, on set just before it happened.

DAVID FROST: And for instance the IMF said last week that America in this situation is, that in fact recession there is a done-deal, do you think that's true?

JACK WELCH: Oh I think it was before September 11th, I think we were, we've been in a slow deceleration since fourth quarter of last year and while September 11th exacerbated the situation the economy was slowing down dramatically.

DAVID FROST: So in this situation that we're in now, where you had that situation before


DAVID FROST: A heightened situation. If you were still Chairman, CEO or whatever of GE or any other company, how would you have fine-tuned, changed your policy, your strategy as a result of the new situation, would you, would you be more risk averse as they say?

JACK WELCH: No I think in, you know I hate to say this in the midst of this terrible tragedy, but in terms of change this is a time to move, to digitise, to spend more money, to take advantage of the environment that's changing around you, that's not to take advantage of this tragedy that took place, but, but clearly in times of change opportunities occur as people retrench you want to go forward and widen the gap.

DAVID FROST: So that in fact you think that Americans can bounce back if, if its CEOs do that?

JACK WELCH: Well I think we have a lot of stuff going on in America, we have a surplus if you will, we'll use up that surplus in fighting this slow down and in taking on this terrorism issue, but we have all the tools economically, we have plenty of money for stimulus, we can have some tax cuts and we still have zero inflation, if you will, and two and a half per cent that sounds right, so we've got lots of tools to get this economy back going again.

DAVID FROST: And of course that has a great effect on the rest of the world but if that happen to the US economy do you think the rest of the world has got to look at a longer recession?

JACK WELCH: There's no question that there is an unknown here, who knows exactly the shape and form of the retaliation, the impact of it etc, but, and the US recovery will not be a sharp V, whether or not it happens in the second quarter of 2002 or the third quarter I'm not qualified by any means to make that assessment, but we are going to have a recovery. But the point I think that is very real is that Europe, when I was here in February we were already starting our downturn in the US and Japan was already on its back, Europe was feeling that it could live alone with its 380 million people and avoid this while the world's largest economy had pneumonia they wouldn't catch cold. Well in fact that's not true, in fact these global economies are all tied together, now when the largest economy gets hit to the extent that yours has been hit prior to the 11th, Europe is feeling it.

DAVID FROST: And in your book you say that the country that you are concerned about is the threat of China?

JACK WELCH: Well the opportunity and threat of China. I think without question as I look at the future, whether you look at South East Asia in the last 20 years and how strong China has become there, the Chinese are entrepreneurs, the genie is out of the bottle in terms of capitalism, they're bright, they're quick, I tell every businessman if you're going to draw a competitive chart leave half the chart open, for companies you haven't heard of yet in China that are going to be after you. And I think China is going to create with the trade issues, all kinds of problems between the developed countries, between Japan, between the EU and the US, as each one tries to deal with, as we did with Japan in the 80's, as we deal with this increasing threat from, from imports and other things from China.

DAVID FROST: Now one of things you did that you were famous for was getting rid of the lowest performing ten per cent within the company on an annual basis, people, managers had to produce their list and category c had to go and so on, and that led, within five years, to a hundred thousand people losing their jobs and you say in the book here, any organisation that thinks it can guarantee job security is going down a dead-end, only satisfied customers can give people job security, not companies?

JACK WELCH: Absolutely true, in fact vital companies, strong winning companies are the only answer to job security, some fuzzy paternalism is not the answer because in the end a sound, viable company gives back to its community, its employees are assured, self-confident, they mentor people in the inner city, they pay taxes, they do all these things and now you're seeing all over the papers as you see the recession come, you're seeing sacks here, sacks there people that weren't competitive, so the only real, no one likes to take anybody out but why, David, this 10 per cent thing gets a lot of action, the facts are, why would you all of a sudden in grade school you're graded, in college you make the team or you don't, you graduate or you don't. People are graded all along why at age 22 when you quit school should you stop being evaluated, it's nonsense.

DAVID FROST: And there's one other thing too in terms of your vital principles in, in recent days I guess, this is the 90's really, which is that you ducked clear of, on the one hand high-tech companies and secondly dot coms, the dot com boom, gold rush, whatever it was, how did you make the decision not to get caught up in those two?

JACK WELCH: Well the facts on high-tech, we like high-tech it takes a lot of money and a lot of time and so medical equipment, jet engines, power turbines, all high-tech, not high-tech in the '90s definition of high-tech but enormous technological breakthroughs, cat scanners, magnetic resonance machines, so we are in high tech. As far as the dot com boom was concerned I was probably too much of a neanderthal myself to, to jump in, so fortunately being a neanderthal in a way may have helped me avoid some of the pitfalls. But the thing that we got left with with the dot coms, is we got a technology and digitisation and digitising companies will change business forever, make it faster, more visible, more transparent. When Japan had its bubble it got left with steel mills, ship building, non competitive things, our bubble left us with technology.

DAVID FROST: Jack thank you very much for being with us.

JACK WELCH: Thanks a lot for having me, I appreciate it.

DAVID FROST: It's been great fun, thank you. That was Jack Welch.


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