As GE's sales leave U.S., big manufacturing stays

By Scott Malone

GREENVILLE, South Carolina (Reuters) - General Electric Co <GE.N> expects its manufacturing footprint in the United States to continue to grow this year on "tremendous demand" for core industrial products including gas turbines and jet engines.

That comes even as sluggish growth at home means that some 60 percent of the largest U.S. conglomerate's forecast $145.26 billion 2011 revenue will come from abroad, Chief Executive Jeffrey Immelt told reporters on Wednesday.

Streamlined manufacturing processes, coupled with rising prices for metals including copper and steel, have conspired to push down the cost of labor as a component of the largest U.S. conglomerate's biggest products, Immelt said on a tour of the company's sprawling 1.5 million square-foot (139,400 sq meter) turbine factory in Greenville, South Carolina.

As proof of the facility's cost-competitiveness, Immelt pointed to a 600,000 pound (272,200 kilogram) electric turbine workers at the plant were assembling for shipment to Iraq, part of a $3 billion order from the Iraqi government.

Labor costs represent just 10 to 20 percent of GE's cost of heavy equipment such as turbines and engines, Immelt said.

GE is adding 125 new workers at the Greenville plant this year, part of an overall addition of 6,500 manufacturing staffers in the United States since 2009.

JOBS PUZZLE

The U.S. manufacturing sector was hard-hit in the last downturn, shedding 2 million jobs, or some 14.6 percent of its workforce. More than two years since the recession's official end, it continues to shed workers.

The nation's stubbornly high unemployment rate, which ticked back up last month to 9.2 percent, is shaping up to be one of the key issues in next year's presidential election.

Even as the widely watched Standard & Poor's 500 index <.SPX> has rebounded from lows, corporate America has continued to cut, with companies including Lockheed Martin Corp <LMT.N>, Goldman Sachs Group Inc <GS.N> and Campbell Soup Co <CPB.N> laying off hundreds in the past few weeks.

High unemployment has created a "foul mood" in the country, Immelt allowed, adding that since joining the White House advisory panel on employment he feels a new responsibility to consider U.S. jobs.

"Big companies like GE are accountable for where our jobs are," he said. "People are going to hold us accountable for where we put jobs."

Today about 46 percent of GE's 287,000-strong global workforce is located in the United States, roughly in line with the 40 percent of revenues it expects to generate at home this year. With the company's strongest growth prospects coming in fast-growing economies in the Middle East and Asia, it will continue to add jobs abroad, Immelt said.

"If we think to chase growth in Saudi Arabia we have to create jobs in Saudi Arabia, we're going to do it," he said. But growth overseas will also benefit the company's big U.S. factories, he added.

"Every unit that gets manufactured in this plant this year has one thing in common," he said. "They are not going to be sold in the United States. Every unit that we manufacture in this site this year is going to be exported."

GE shares edged up 13 cents to close at $18.51 on the New York Stock Exchange on Wednesday.

(Reporting by Scott Malone; editing by Maureen Bavdek, Andre Grenon and Matthew Lewis)