"NEW CHALLENGES OF NORTH AMERICA'S "FASTEST' DECADE"
An Address by RALPH JARRON CORDINER
Thursday, March 31st, 1955
CHAIRMAN: The President, Mr. James H. Joyce.
MR. JOYCE: We welcome as our speaker today one of the outstanding United States' business executives-Ralph J. Cordiner, President of General Electric Company.
Born in Walla Walla, Washington, 55 years ago, Mr. Cordiner was educated at Whitman College, graduating with high honours with his Bachelor of Science degree in 1922.
After a year in the commercial division of the Pacific Power and Light Company, Mr. Cordiner joined the Edison General Electric Appliance Company of Portland, Oregon, a wholly-owned subsidiary of General Electric Company. Since then he has, at various times, held the position of manager of five of the company's major divisions.
Mr. Cordiner joined the War Production Board in December 1942 as director-general of war production scheduling and three months later became vice-chairman.
Returning to General Electric in July 1943 as Assistant to the President, Mr. Cordiner was elected vice-president in 1945 and Executive Vice-President and a director in 1949. In December 1950 he succeeded Mr. Charles E. Wilson and General Electric's fifth president.
General Electric has 135 plants in 105 locations and 28 states of the United States, and employs over 210,000 people. It is owned by over 295,000 shareholders. Its subsidiary, Canadian General Electric Company Limited has 12 plants in eight communities employing over 14,000 people.
We feel honoured to have the head of this important and widespread enterprise here today to give his first speech in Canada. His subject will be: "New Challenges of North America's `Fastest' Decade".
MR. CORDINER: The opportunity to meet with you today is one which I have been looking forward to since last May when members of the Business Advisory Council of the United States Department of Commerce were honored by the attendance at a meeting at Hot Springs of eight distinguished Canadians, representing a cross-section of the viewpoints of Canadian industry, commerce and finance. The Honorable Douglas Stuart, United States Ambassador to Canada, urged upon members of our Business Advisory Council the great mutual benefits to be derived through participation in discussions of economic, political and social objectives at meetings such as this. I would like to qualify myself therefore as not only a friend and admirer of our country's Ambassador but also a firm disciple of his philosophy concerning the value of an interchange of ideas.
Possibly I should further qualify the standpoint from which I express the views of a United States citizen by giving you a brief personal background. All four of my grandparents were born and spent their entire lives in Scotland. My mother came to the Northwest Territory in early womanhood, and my father spent his early boyhood until sixteen years of age in Guelph, Province of Ontario, Canada. I spent most of the first 30 years of my own life in the Pacific Northwest which afforded a background in many respects similar to great areas of Canada, notably the Province of British Columbia. From both my parents and friends in Canada I have long since learned to understand and appreciate a Canadian's justifiable pride of citizenship and enthusiasm for the growth and development of your great country. Many Canadians have advised me that when on visits to the United States or Europe, they have been affronted upon being classified as Americans, as though they and the citizens of the United States were one and the same. While the similarity of our economic problems in mining, agriculture, industry, lumber, commerce and trade is very great, it is not in any sense identical.
Today what I would like to discuss is not a plan or a program for the development of Canada, but rather, acting on Ambassador Stuart's suggestion concerning the value of the interchange of viewpoints, to explore and discuss problems existing in the United States, with emphasis on a few examples of problems which can be turned into opportunities for continued growth and progress if we can reach agreement upon the correct long-range answers.
Ascertaining what the United States viewpoint is on many of our social, political, and economic problems of the day must often be very confusing or misleading to observers in other countries. Much of the misunderstanding of United States opinion results from a failure to recognize the essential fact that different geographic locations within the United States have entirely different approaches at various times to national policies, and those attitudes are closely linked with underlying geographic and economic issues. In speaking of geographical differences, I refer not to the 48 individual States, but more particularly to broader classifications such as the Northeast Atlantic Seaboard, the Southeast, the Midwestern States on the banks of the Mississippi and the Ohio Rivers, the Southwest and the Rocky Mountains, and the Pacific Coast States. The differences between these regions, I would assume, are probably similar in nature to the economic and political differences among the various groups of provinces in Canada.
Oftentimes visitors from Canada express amazement that viewpoints voiced on the floors of the House of Representatives and the Senate are quite contradictory to impressions gained from discussions with friends and business associates in New York City and Washington, D.C. Further confusion undoubtedly arises from the fact that since World War I our two main political parties have appealed to the voting public at the time of national elections on platforms which bear little relation to subsequent legislation. Unfortunately, in recent years, these major parties have compromised on many fundamental issues, seeking support trom economic pressure groups. Do not be misled by publicity concerning strong opposition within either one of the parties which might lead you to believe that a third or "splinter" party was shortly to be established. The balance of power at the Congressional level usually resides with a very few pivotal states. Knowledgeable political writers are convinced that election to state and national offices is now determined largely on the merit of the individual candidates rather than on party platforms. We saw examples of the public's reaction to the strengths and weaknesses of individual political candidates contrary to national trends in electoral preference as recently as the Fall of 1954.
But I am not here to talk about politics in the United States. Rather, as a basis for understanding viewpoints on other problems, I wanted you to have in mind that, fundamentally, the people of the United States are not as divided as you might believe through reading newspapers or magazines, or listening to news commentators on radio or television. In the United States, as in Canada, we are great believers in the freedom of thought and expression for each individual; so you are bound to hear differences of opinion expressed.
In economic matters, we are also believers in the freedom of individuals to compete. Those of us who are devout supporters of a competitive enterprise system cannot stress too strongly our belief in the necessity to protect the weak against the economic power of the strong. We believe sincerely in our laws designed to enforce this protection and to prevent all forms of cartels or combinations to control markets.
One final point about interpreting the significance of political opinion in the United States; it is important to keep in mind that under our constitution any legislation may be subject to review by the judicial branch, and that decisions of the Supreme Court oftentimes tend to negate, implement, or set aside completely legislative acts.
Now as an industrialist with the good fortune to be associated with the great and dynamic electrical industry, I would like to talk to you briefly on one man's opinion as to what lies ahead in our economy. In speaking of the next decade, our prospects of growth are so great (and I believe that in Canada you may have prospects in much the same proportions), that it is difficult to discuss the future without seeming to be guilty of "braggadocio." The United States, I know, is sometimes criticized, and often justifiably, for making 'superlatives a habit of expression. This attitude could well come from a feeling of inferiority because of our youth as a nation. It also reflects a historical resistance to acceptance of direction from Europe or allegiance to European customs. Possibly with increasing world-wide travel by people from the United States, and as more and more citizens from other countries visit us, we in turn will become more world-wide in our viewpoint and understanding. The habit of superlatives may further be encouraged by the intense competition we have at the market place in our own country for both products and services, and there may be an unfortunate tendency to carry this attitude over on other fronts.
In order to put the economic growth of the next ten years in proper perspective, it is important to remember the very rapid increase of our population. Last year in the United States a baby was born every eight seconds. Our total population increase during 1954 was 2,700,000 persons, adding the equivalent in one year of a city larger than Philadelphia, Pennsylvania, or the equivalent of Canada's two largest cities, Montreal and greater Toronto. Our most conservative forecasts prophesy a population of 180,000.000 by 1965, and many of us are of the opinion that it will approximate 200,000,000 by 1970.
During the period from 1955 to 1965 our Gross National Product in terms of 1954 dollars is expected to increase from 360 billion dollars to 500 billion dollars. Please do not think that I am falling into that habit of "braggadocio" that I criticized a moment ago. In my experience during World War II years with the War Production Board in Washington, I learned a lesson which all bureaucrats surely must accept, that the first digits in a set of figures are the important ones and that the number of zeros are all relative. So I could well have stated that the United States Gross National Product will increase from 3.6 million to 5.0 million in ten years. Many industries-notably the chemical, petro-chemical and electrical -will double in the next ten years.
Recognition of these dynamic factors in our economy is occasioning the spending of great sums of money on projects designed to serve the needs of our citizens in all classifications. Large-scale programs have been implemented or are proposed in industry, commerce, transportation, and agriculture. The rate of private capital investment for new plants and more productive equipment which now approaches 30 billion dollars a year, is expected to increase to 60 billion dollars by 1965.* In addition, we will be making huge expenditures to make up for shortages in the social necessities of hospitals, churches, and schools. President Eisenhower has proposed the expenditure of 101 billion dollars in Federal, State, and local funds for highways in the next ten years.
We are a country of travel and movement. Possibly too much of our travel has been within our own borders in the past. But, like Canadians, we inherit from our ancestors a tradition of mobility. We have continually been moving more and more to the west, and - especially since World War II - increasingly to the south and southwest. One of our great problems in large industrial communities of the United States today results from the mistake of having ignored this tradition of mobility. This is a problem which undoubtedly you gentlemen of Canada will study very closely and guard against by doing your customary good planning. Either in the past or in the present, both management and professional labor leaders
*Source: Joint Committee on the Economic Report, Potential Economic Growth of the U.S. During the Next Decades, U.S. Congress, 1954.
in the United States have acted as if it were desirable first to concentrate great industries in a single location and then to freeze those concentrations as they exist so that it is impossible to correct the mistakes of the past. Thus, to use but a few examples, we have concentrations of such great industries as automobiles in Detroit, Michigan, rubber in Akron, Ohio, steel in Pittsburgh, Pennsylvania, garment working trades in New York City. When a disproportionate concentration of the population is dependent upon a single industry, a host of economic and social problems are apt to follow.
Unfortunately, all too few managements of large and small corporations have seen the importance of taking new industrial employment to communities where there are available workers rather than crowding further our already overstrained large industrial centers. Too few of our professional labor leaders have recognized that there are more positive and progressive solutions to the problem of seasonal or cyclical unemployment than proposals such as the "guaranteed annual wage" which run counter to our traditions of freedom of individual choice and mobility.
Possibly, I speak of the desirability of geographical decentralization with more than the normal personal conviction because the Company with which I am associated has historically operated in relatively small communities. In our post-war expansion we have followed this policy with the single exception of our great Appliance Park in Louisville, Kentucky, where a common large facility for all of our major appliances makes it possible to serve our customers better through consolidated carload shipments. Thus we have established new factories in many towns with which you may not be familiar - to mention but a few, in De Kalb, Decatur, Mattoon and Bloomington, Illinois; Anniston, Alabama; Rome, Georgia; Asheboro, Hickory and Hendersonville, North Carolina; Tyler, Texas; Anaheim, California; Burlington, Vermont; Sommersworth, New Hampshire; yes, and even in Limerick, Maine.
This expansion has not in any sense been at the expense of those communities where we were previously well established. On the contrary, employment at our older locations such as Schenectady, New York, Pittsfield, Massachusetts, Lynn, Massachusetts, and Fort Wayne, Indiana, has increased substantially in every case.
Another problem we have in the United States, which is equally an opportunity to gain better understanding, is the failure in some segments of the population to realize that our long-term growth and prosperity depends upon the degree to which our large corporations are managed in the balanced interests of our customers, our share owners, our employees, our suppliers, the public and their servants, the Government. A current example of misunderstanding is the distorted meaning which is being given to the word "automation," as if it were a weapon to be used against employees rather than a method of making human effort both more productive and more rewarding. Union publications run cartoons portraying workers being turned into mechanical men. The same type of bugaboo lulled industry into a period of non-accomplishment for approximately eight years during the 1930's. The bugaboo word then was "Technocracy." Today "automation" is being given the same false meaning. It is implied that the great majority of our employees are suddenly to be replaced by some great mechanical robot. The truth is that "automation" will come about by a gradual process of evolution rather than revolution. And rather than being an evil, it is the only possible solution to the attainment of the predicted growth in our Gross National Product by 1965 which is required to satisfy the needs of our growing population. Despite the population growth in this ten-year period, the available work force, the number of those of normal working age, will increase only 11 per cent due to the low birth rates of the depression years. And in the same period our minimum goal for continued progress is an increase in production of more than 40 per cent.
We need better understanding that the real opportunity to create more employment is not by resisting our natural inheritance of mobility, not by resisting progress in technology, but rather by putting more and more effort and attention upon research and advanced engineering development. If I may be pardoned for again using the Company about which I am best informed as an example, this is exactly what we in General Electric have been trying to do on the theory that it is in the best interests of the five groups previously referred to: our customers, our share owners, our employees, our suppliers and the public. Since 1947 our Company has invested some billion one hundred million dollars in new and improved laboratories, factories, and equipment. Approximately 150 million dollars of that expenditure has been for improved research and advanced development facilities. Approximately 70 percent of the total has been for modern processes, machine tools and equipment to lengthen the arm of the worker and to assure our customers of better, higher quality products.
I would like to speak briefly on one other subject which possibly relates closely to the question which may be uppermost in the minds of many of you at this point, namely, "What can I do with regard to my own operations to attain a portion of that growing opportunity in the United States?" And that brings us to the question of trade and commerce. It is reasonable to assume that any contractual agreement between an individual and his company, or between two individuals or two companies, or between two nations such as Canada and the United States, will not permanently prevail unless the arrangement is fair and equitable to both parties. It is for that reason that we use the expression "Reciprocal Trade Agreements." Increasingly our enlightened citizens recognize that we have an obligation and a responsibility to earn friendship and better understanding through world trade, and that this is particularly important as between countries such as Canada and the United States because of our common border in this great area of North America.
While we believe in the mutual advantages of trade between countries, I am sure that you will not misunderstand me. I would be chagrined indeed if my associates in the United States did not make every possible effort, through application of research, engineering and manufacturing techniques, and through competitive pricing, to earn for their company an ever-increasing share of the market for electrical goods of all types. You saw evidence of that in our recent successful quotation on the St. Lawrence power project where General Electric won in the competitive bidding for all 16 of the hydro-generators on the United States side, and the Canadian General Electric Company, Ltd., will install eight of Canada's 16 units. Our Large Motor and Generator Department in the United States was able to compete successfully against European bidders, where hourly wage rates in the shop are only one-fourth as much, apparently because of a combination of research and engineering know-how and our investment in the best of facilities.
Finally, when we cross your borders into Canada as an electrical manufacturing Company, we recognize that all you Canadians very justifiably want to develop your own country in your own way with your own people. For that reason in the year 1892 the Canadian General Electric Company, Ltd., was established. Through this company the research and technical knowledge of the entire General Electric Company in the United States is made available to Canada. And may I add that the flow of information is definitely a two-way street. Our associates in the United States have found answers for many of their problems from our Canadian associates.
I spoke earlier of the post-war expenditures of the General Electric Company in the United States, referring particularly to the major emphasis placed on research and advanced development laboratories and on new processes and equipment. Through the contributions of the Canadian General Electric Company, Ltd., to the economy of this country, we hope we are equally a good corporate citizen of Canada. New and improved facilities added since 1945 by the Canadian General Electric Company, Ltd., have cost three times the amount previously invested. Employment has increased from 4,500 persons in 1939 to approximately 14,000. As you undoubtedly know, the j Canadian General Electric Company, Ltd., is staffed principally by Canadians. Throughout General Electric we keep the opportunity of transfer, which exists among the various operating departments in the United States, open world-wide to all employees. Many of you, I am sure, are familiar with the emphasis the General Electric Company has placed on improved education and training in the United States. It is therefore greatly reassuring to us in the United States that we are not alone in seeking the solution to our educational and manpower development problems. The requirements of the Canadian General Electric Company for engineers and college graduates of all types who have been fulfilled almost entirely by graduates of Canadian colleges and universities. In addition to the approximately 1100 graduates of these colleges and universities in Canadian General Electric, we have about 110 graduates of your colleges and universities serving with General Electric Company in the United States. Canadian General Electric Company, Ltd., has had its own "test" engineering course to provide advanced training for engineering graduates since 1907 and concurrently with our present effort in the United States the Canadian Company has increasingly aggressive programs for training people in other functions of the business. Through the combination of your educational institutions and your industries' advanced training programs, Canada is therefore making a very substantial contribution to our mutual and tremendous needs for manpower development.
Three years ago in Evendale, Ohio, there was an unusual program of celebration to dedicate the new headquarters of the Aircraft Gas Turbine Division of the General Electric Company. The program was entitled, "The Fastest Ten Years in History" - another example of the United States fondness for superlatives, you will note, but also in fact a literal description of the accomplishments in jet engine development from the date of the first successful flight on this continent. From the standpoint of not just aviation alone but of our entire economy, the next ten years will have to advance even more rapidly if we are to keep up with the needs of the growing populations of both the United States and Canada. The challenge of the next ten "fastest" years in North America should provide a thrilling experience for businessmen of both countries sharing the opportunities of a great continent. Surely all of us will meet the challenge more successfully if we can benefit from the interchange of knowledge which Ambassador Stuart has urged upon us.
THANKS OF THE MEETING were expressed by Mr. Sydney Hermant.