LOUISVILLE — General Electric chief executive Jeffrey Immelt says he's returning refrigerator-production work to the United States from Mexico to boost profitability in appliances. Investors say a bigger reason might be his leadership of President Barack Obama's jobs panel.
Immelt was in Louisville on Tuesday to say he's bringing back 600 jobs under an $800 million investment in its manufacturing complex there. The new positions add to GE's existing Louisville work force of about 4,000.
Investors, who expressed ambivalence, said the shift would mean relatively little to GE's strategy or financial outlook. The Home & Business Solutions division that includes appliance manufacturing makes up only 5.7 percent of GE's $147.3 billion of revenue and 2.1 percent of its $14.2 billion of profit.
"I don't view it as anything more than helping out the cause," said Peter Klein, a senior money manager at Fifth Third Asset Management in Cleveland, which oversees $14.6 billion in investments including GE stock. "It's good for the headlines. It's not going to affect anything."
GE dismisses claims of any political overtones. The job shift makes sense because U.S. workers can produce higher-quality products for less, according to the company.
"The only way this works is if we make more money," Charlene Begley, CEO of the Home & Business Solutions unit, said in an interview on the floor of the retooled factory after the refrigerators to be built were unveiled Tuesday. "The economics were better for the shareholder bringing it back."
More than 10,000 people applied for the Louisville jobs, which pay $13.03 an hour under a union accord to cut new employees' wages. That compares with $22 an hour for those hired before 2005.
Along with water heaters that began production last month, the refrigerators are GE's first new product lines in Louisville in more than 50 years. Both are designed to meet demand for energy-efficient appliances, with the water heaters using less than half the energy consumed by traditional models.
"Our dedication to making great products has to be matched by our dedication to investing in facilities like this one," Immelt, 56, told an audience that included Gov. Steve Beshear and 1,200 GE workers.
Immelt, a Republican, was named to lead the jobs panel for Democrat Obama in January 2011, about 18 months after GE said it would add water-heater jobs in Louisville. The White House tie had "nothing to do" with the idea of putting more appliance work in the United States, Begley said.
Most of the division's growth potential lies within the United States, GE said, and the company plans to add 1,300 U.S. jobs in that business through 2014. GE wants to boost industrial revenue from so-called growth markets outside the United States to 50 percent within 10 years, from 37 percent now. Appliances went unmentioned during a March 7 meeting with investors in Rio de Janeiro focused on emerging markets.
That's helping to rekindle speculation that the unit, which also makes light bulbs and microwaves, might be sold.
"It doesn't fit in at all," said Nick Heymann, a William Blair analyst in New York.
The criticism that GE and Immelt have drawn is undeserved, especially in a place where they're bringing back jobs, and reflects an increasingly contentious political climate, Louisville Mayor Greg Fischer said.
"It's a reflection of the cynicism in our country right now," Fischer said. "People should pull back and realize this is a good thing for our country and celebrate it instead of raising these questions."