MAKING IT AGAIN IN AMERICA

You know, I had the privilege of interviewing Kevin Nolan, who is president and CEO of GE Appliances, some years ago. I think we were in Georgia near Georgia Tech, and we were talking about the skills gap in the country. I didn't know this guy, and I said, GE Appliances, damn, that stock has just dropped on me. Don't talk about that. It's up 22 cents a share since we walked on stage, I just noticed. But it is— but I realized very quickly that Kevin Nolan and GE Appliances were not part of General Electric anymore. And if some of you may have read the James Fallows cover story in The Atlantic some time ago titled Comeback, and it was looking at revitalization in industry and particularly in manufacturing in certain sectors around the country. Jim and Deb Fallows have gone further with that in their book Our Town, looking at revitalization in communities across the country. And Kevin and his company were profiled in terms of how America was getting back into and revitalizing and reinvesting in appliances again. You know, the washing machines and the refrigerators that President Trump likes to talk about, Kevin's team builds. And I did not realize that a Chinese firm, Haier, Qingdong Haier, had bought and kept Kevin as its global— as its CEO running the show. So let me just start with you, Kevin. Thank you so much for flying up here. It's good to be here. And I just lost my mic here, so thanks, AV team. I'm going to just do it my way. Here we go. And first, can you give us a snapshot real quickly of the size and scale of GE Appliances? And I just want to tell the audience here, because it's fascinating, GE Appliances just announced a $115 million expansion of a refrigerator plant in Decatur, Alabama. announced a $150 million investment in distribution in Dallas, Texas. Also in Jackson County, Georgia, another $55 million investment. So you're investing huge at this moment. And so give us a quick snapshot of your world, your dashboard as a CEO operating and building things in the United States with someone who speaks a very different language that you have to report to every night?

Yeah, so it's an interesting situation. Of course, we're a $7 billion business, kind of an iconic business. It's been part of America for a long time. We're headquartered in Louisville, Kentucky, and we still do a major amount of manufacturing in Louisville, Kentucky. All the dishwashers that you see out of GE, all of our top-load washing machines, and a lot of our refrigerators come right from the plants that I look out my office every day. So we manufacture there, but we also have a presence— we make cooking products in Georgia. We also made an investment in Selmer, Tennessee, where we make refrigerators, but we've also now just recently added air conditioners to the mix. We made an investment a few months ago to do that in Tennessee. So we're very predominant in U.S. manufacturing, about 12,000 associates. You know, we come to work every day to build stuff, to make stuff. Hopefully you come out every weekend and buy stuff. We really like that. But it is about U.S. manufacturing. We haven't always been about that. I'd say I was somewhat of a habitual outsourcer when I first joined GE Appliances. I was a longtime GE person, about 28 years, 20 years now with GE Appliances.

Do you have a lot of GE stock?

Let's not talk about it. Let's keep on rebuilding America. We'll keep the subject here, Steve.

But I— so you have all of this capacity, and I think, you know, it would be useful just in terms of looking at whether or not we're at an inflection point that's genuine or not. I am interested in the fact that, you know, the old GE, you said you were outsourcing a lot. That hits employment. That hits communities. And are we at a point now where— I mean, I know you've expanded workforce by thousands of folks. Yeah. And are— do you sort of sense a feel that American manufacturing at large is changing? Are you guys part of that? Is having a partnership with a Chinese owner part of that equation as well?

Yeah, so it's interesting. You know, us reshoring and bringing a lot of manufacturing back to the U.S. started pre-Hyair. We started that under GE. A lot of it was fundamentally I saw where things were going. We were losing sight of, you know, having the technical skills. And we lost sight of the manufacturing skills. We're about 20 years of not investing in manufacturing in this country. So about 2008, we made some major investments to reshore manufacturing. And it was done for a lot of reasons. It, to me, always makes sense you want to make your products close to your customer where you can, right? And you look at a refrigerator, you look at a washing machine, they're big products, much like automobiles. There's a lot of reasons why the U.S. is the right place to manufacture those. But it's not easy. I mean, we've gone through a lot of hard work to kind of bring capabilities back, to still grow capabilities. So I'd say what we're doing makes sense. I think a lot of people are looking at it. And I've always looked at its transportation too, the size of the goods. You know, why ship a refrigerator halfway around the world or, you know, put it on rails for days on end when we could make it closer to the customer and distribute it The reason we're in Louisville, Kentucky is very central. We serve 80% of the population within 12 hours. So you look at a lot of where our manufacturing sites are, distribution sites, it's logistics is strategic to be in those areas.

You know, we hear a lot about industry talking about workers, the skills gap, the need for digital literacy, new software literacy. Is that true to your industry and what specifically are you doing to Yeah,

so that's definitely a problem. I mean, you look at the manufacturing world today, I think people have lost sight. When I grew up, we had things like PLCs and ladder logic. We don't use that anymore. Everything's gotten very advanced from the equipment in our buildings. One of the main issues we had is downtime on equipment and not having the people to make sure we can get this equipment up and running. You know, we use things like laser welding, used to be spot welding. Like, maintaining a laser weld is a whole different you know, animal than maintaining a spot welder, and we didn't have those skills. So we've worked a lot with our local schools, local government, to put in what we call Kentucky FAME training programs. Hmm. And really, how do we develop people that understand manufacturing, that see manufacturing again as a good career? I think too many kids think that that's not a career I want to get into, it's all going away. That's— it's just the opposite. There's a huge demand for the kind of technical people and folks we need to help grow manufacturing back where we're based.

You know, when I first met you, I thought you were the head of a dinosaur company that was dying. And I read up and I got fascinated by how you've invested so much in sort of the makers movement. And, you know, one of the kind of— I mean, I'm just being honest. You know, I hear about big companies in big places. You know, they seem to strangle creativity, strangle innovation. miserable places for people to work unless you're at the top. And I watched a Michael Moore film somewhere along General Motors or something. The Top Star, I think. Yeah, so, but, you know, you convinced me that you were doing things inside the company with your workers. And I just want to put one word on it and have you tell the audience about it because it's so intriguing. Opel.

Yeah, yeah.

Yeah.

So what we're alluding— we started about 5 years ago.

Was it a dinosaur dying before? Yeah.

I would say we had some problems. And I think with the new parent and where we're going, I see the future. I've never felt so good about it. But we saw like innovation, the main thing you need to manufacture. We invested all this money in manufacturing. We were worried about innovation. So we started something called FirstBuild, which is a cooperation—

It's called FirstBuild?

FirstBuild. So it's our own company we started. It's really a startup. So we said, how can we be like a startup? How can you take this 100-year-old company and act totally different? Corporations, I think, have innovation all wrong right now. We have these moats of IP that go around. We don't want anyone to see what we're working on. It is stifling creativity. FirstBuild is about opening up your innovation process to your community, to the world, so everyone can get involved, can see what it is. We look at IP totally different. Anybody can log on firstbuild.com. You can see what we're working on, our product pipeline, everything that's going on in that entity. Opal was a good example. It's an ice maker that we developed out of FirstBuild. They found out that people like chewable ice. You know, people love to have this soft ice. So

I'm looking forward to chewable ice with my cocktails tonight. Yeah,

and to get it, a lot of people were driving out to different places where you could get it. You couldn't get it at home, you know. So FirstBuild came out with Opal. It's done extremely What

are some of the other examples?

You know, we did— we have Suvi. We've worked with different communities. I'm actually after this heading up to New York. I'm going to meet with the Jewish community in Brooklyn. We've developed modules that, you know, make things go into Sabbath mode that, you know, really work with community level. So FirstBuild is about how do we work with communities. You know, how does a big company be very nimble and meet the needs? Because I think manufacturing has a big pressure now to be customized. You know, we have mass manufacturing. We're good at it. But people want custom. They want things that are right for them. And that makes it ever more important that you build things where those folks are and you really work. And we're trying to— how do we not only sell things to different communities, but how do we develop products with different communities?

You know, I like— you know, some of the things I was looking at, you have appliances for the blind. So you have appliances that speak. You have appliances that speak in Spanish or other languages, which are quite fascinating. GE Appliances, for those of you who don't know, is way cooler than you thought they were going to be. And I say that as a friend and admirer of Kevin. But Kevin, let me talk a little bit about— we're in an interesting political and economic environment today, right? So we have the president, I think, unveiling $200 billion of new sanctions against a whole variety of players, but China is part of that. And trade, you know, I tell people, you know, trade as a topic used to be what I was obsessed with. I look out at people like Paula Stern, whom I've known for, you know, since she was in diapers just 20 years ago. But we've been engaged in trade. Many of you and I have known each other for a long time talking about trade. It disappeared as sort of out of the lexicon of interest in the country, but trade is back now. So how does a company like yours that has such an interesting ownership structure in an arena where we're not talking about nanotech and maybe we are talking about automation, and the kinds of newfangled operations that are going to be part of your company, but we're talking about washing machines, dryers, refrigerators, like the President is talking about. So how are you navigating in this political and economic terrain today?

One, I don't think I could find myself in a more interesting situation that just seems to have happened at one time. Our owners have been great. Our owners have, and it's different than what you hear.

Are you saying that because you have to?

No, I'm saying it— one is, you know, I have less conversations with— I've never had the autonomy that we have. You know, we've put all local management in. They've been on there, and they've talked about, you know, how do we reinvest? We're a profitable business, but how do we reinvest and we grow and we grow locally? So the parent and the way things— there was a lot of nervousness. You know, when you're being taken over by the Chinese, what's going to happen? You know, and there's such gloom and doom rhetoric, and I would say we've seen just the opposite in us making decisions and us investing. And I think the proof is in the results. You know, we're growing jobs. We're growing our footprint in the U.S. We're growing our footprint from a manufacturing standpoint. So that's been great. You know, I think the other thing that's been good for us this year is, you know, the new Tax reform was good. You start seeing the investments, the things that we're making as a company. I think that's what was hoped that was happening. And I feel very optimistic about it. I feel very optimistic about how we can reinvest our capital and how we can grow jobs. And how— what it's ultimately about, how do we bring better products? And how do we bring better products out to our consumers? That's what we're focused on day in and day out. The tax issue is an interesting one. I mean, I'm out there running this morning around the mall. and my phone's lighting up about what's on the tax bill, what's gonna be impacted. You know, we've got a lot of fear of our business. When you run a business, we have an annual plan that we have to hit. When we were sitting back there in last December, we're starting to think about strategically, what do we do, where do we go? This was not in our cards. Hmm. You know, there's— this wasn't— what's happening today wasn't in our cards 2 or 3 weeks ago. Programs and projects and investments, they don't work on a weekly basis. Mm-hmm. Right? We're making strategic investments. You know, you talk about Decatur, Alabama. We're doing a big expansion of our refrigerators that we build there. You know, that's done. You need a predictability, a stability. So whether— I'm no expert. I'm an expert on refrigerators and washing machines. I'm not an expert on tax policy. I'm not an expert on foreign policy. foreign trade, but I do know when you run a business, you need to have an environment that you can predict. The more predictable it is, the better you can lay out strategic plans and the better you can chart a course forward.

One of the things we're going to get at today, one of the things I think is interesting about economic discussions is traditionally when you get folks together, we may bring people together to look at automation and that's one silo, or we may get people together and talk about inequality and that's another silo. We may talk about women in boards and that's another silo. We may talk about tax policy. And so today we have all the silos here and they're talking, and I'm just sort of interested in how someone like you looks at how to create healthier communities that are engaged with firms like yours. What are we missing in terms of the social contract, the economic social contract with workers? Because there's a lot of fear out there. Yeah, yeah. That while you may be succeeding, there's not a lot of trust that will be there. But as you think about a civic leader as a business leader, what advice do you have for folks here about creating a healthier economic equation?

You know, I think something that resonates is optimism. I think optimism is so important. You know, we talk about automation. Everyone— people sit here and they'll sit away from places that actually make things and talk about automation is going to take away our factories, they're going to take away our workers. You know, all last week I did a lean training. So last week I actually sat on the assembly line and made washing machines. Probably check when you— if you buy a GE washer, don't buy one that was made last week.

Yeah, I talked to him on the phone. He didn't sound happy.

But when you sit there and you work with the folks and you see the value and what our associates, what we bring to the party, you know, I have a lot of optimism. I have a lot of optimism, man. If you look at robotics, robotics are helping our manufacturing. They're never going to take away, I don't think, And I know a lot about manufacturing. They're not going to eliminate those jobs. And it's been a history of that as everyone's talked about all this gloom and doom. I think that talk hurts because what it does is it doesn't have people interested. It doesn't have kids that want to go into STEM. It doesn't have kids that see a future in these kind of roles of being an engineer, being into manufacturing. So I think we've got to get the story out more that these are good jobs. These jobs are going to be here. They're going to be here in the future, and they're not going away. So I think we've got to be more optimistic in our talk.

And as you sit and you're playing this role in community in Louisville, what are the things that you really worry about? What are the things that could get in the way of the success, the comeback that Jim Fallows wrote about?

You know, I don't worry about competition. The appliance industry is competitive, but I'll take my team up against anybody. We're a competitive team. We know what it takes. We know the market.

Who's your biggest competitor?

You know, the big guys like Samsung, LG, Whirlpool. And they're good competitors. But I'll go into the game any day with them. And I think we're going to do fine. I think it's the economic environment. I mean, at the end of the day, we're as good as we need. Housing market, you know, the housing downturn, it hurt our business. We lost— I mean, it was painful. A lot of folks lost jobs. It was a hard thing to go So we need a good robust economy. You know, we need folks that are going out there that are buying products, that are, you know, on the weekends that are going out shopping. When it's really hot, everyone please go buy an air conditioner. You know, it's— but I would say it's the economy because there's a lot of things that are in our control.

Right.

And, you know, we'll get great products. We're gonna get, you know, good cost-effective manufacturing, but the economy's got to be there.

You know, I know you've just last month in June celebrated your 2-year anniversary of the new ownership. If you were to just share with us the, the starkest differences that have occurred between before and after, what are those?

Yeah, I would say, you know, now that we're a part of HyAir, we're out there playing to win. You know, I think when we were a part of GE, we were just, you know, let's be a good company, let's do the right thing, let's That's not what we talk about when we come into work every day. We talk about how we're going to grow the business. We're going to double the business. We're going to be number one. So the starkest is we're doing what we have to do to grow and to win out in the marketplace. We're reorganizing. We're adding people. We're adding expertise. So it's been a great story. And it's been a story of seeing folks that have always— you thought they had capability, but they never really won. And seeing us put numbers up on the board, having good quarters, it's energizing to see where we're going.

I want to go to all of you for just a couple of questions in just a moment, but I can't help but ask this question. I once interviewed Jeff Immelt. Some of you may remember Jeff was a former CEO of General Electric. And I asked him about the previous era and the legendary stewardship of Jack Welch. And Jeff said on stage, Look, I would have liked to have had that time period because anybody could have run GE at that time. I have a German Shepherd and my German Shepherd could have run GE at that time. And I'll just let you make the associations there between Jack Welch and his dog. But it was true and it was a statement that he made. And I'm just sort of— as you look at the challenges GE has today, your former firm, what are the 2 or 3 things they could do to help them create the optimism to change things around? Because, you know, the stock— and I think that, you know, it's a beleaguered company right now. And so you're the part of the company that's now rising again. But what do you think they could do based on your experience and what you've seen?

I guess I would turn it to what we've done that have dramatically improved our results, right? And what we're trying to do, and And it's this philosophy of how we break the company down into what we're calling micro-enterprises. Hmm. So FirstBuild was a micro-enterprise. We call it a micro-factory. So we're taking that theory and we're bringing that back into the parent. So we're trying to make it— the more you can attach your results to the market as an individual— and this is a big theory that Haier has, and I really embraced it— is we need to have each individual understand and feel the market. I think at GE it was very removed. We were very functional. We were a great process-oriented company, but I wouldn't say we were a hungry company that was focused out there on the market and dealing with the day-to-day market changes. So I think that's the big trick is you have to focus on your customer. You have to focus on your market. And not just the CEO. It has the people that are doing it.

And also your worker who may have a great idea.

That's right.

That they can run with.

And we like to say everyone's an entrepreneur.

A microenterprise inside the company.

That's right.

Great. Fascinating. Let me open up the floor here, and we'll try to— I'll try to see. We have a lot of lights here, but did I see a hand go up over here? Yes, right up here in the front. We have Alan Bahar here. I will not know and remember all of your names. This just happened to be an accident. I almost wore your tie today. He makes ties. Yes, yeah, yeah, okay, great. Go ahead.

So you said you're owned by the Chinese. Are you exporting any of your product now to China?

That's interesting.

Yeah, so if you look at the products like we're building out of Selmer, we make a very high-end refrigerator. So we are, we're starting to have exports. We're launching the Monogram brand in China. We've opened up Monogram showrooms now around China. So we're kind of looking at the high end of the product line. But it's funny, I had my, you know, my boss came over. One of the things he encouraged is, why aren't you guys looking more on how you can export? So the opportunity is there. I'd say we're really focused on our market right now and kind of opportunistically, you know, by different brands doing that.

Fascinating. Paul Stern here, and then we'll go right here in the middle. There should be a mic here. Where's our mic person? What's your name with the mic? Daniel. Daniel. A round of applause for Daniel. Good, good. I love my mic runners. Yeah, Paula. Ambassador Stern, former chairwoman of the International Trade Commission.

Hi. Thank you so much, Steve, and for your presentation. I know we're trying to avoid the elephant in the room, but I can't help it.

What elephant?

Well, it's several, but—

Yeah, that's what I was worried about.

It's basically the cost of steel, the 232 elephant that has been imposed by the Trump administration. How does that affect your costs of production? I would imagine it affects all of your competitors if they're in— US-based competitors. Correct. But if you're exporting Right. It must have an impact. Terrific.

Elephant in the room. So, and right here in the middle, we'll go right here.

Yeah, so it's an issue. I mean, we're, you know, and I don't think people realize, like, the dishwashers we're making in Louisville, Kentucky, I mean, we're looking, there's a real impact of what we're starting to feel. So it's jobs and work that we're doing here is we're seeing, you know, inflation. So the amount of inflation that we're dealing with this year is—

So per unit, how many dollars more?

I can't give away that, but it's—

Tried, guys.

It's a pretty good— it's a pretty good percentage. So I don't think people are realizing. So it's coming. We're all getting hit with that now. The industry is getting hit. But that's the thing that I lose sleep about. We're having a great year, but the inflation numbers are tough.

The lady in white. I think it's white.

Hi, Barbara Johnson.

Oh, great. Arbora, how are you?

Good to see you, Steve. Related question, I wanted to ask about your supply chain. It's great, the reshoring, but presumably you have inputs from all over the world. Could you talk about how that's changing?

Yeah, I mean, it is a global— I mean, we have a global supply chain. You have to, especially in the appliance industry. If you look at compressors, they're probably the best example. Compressors also are an issue right now from a tariff standpoint. Standpoint. You cannot get those compressors in the US. They're either going to come from South America or they're going to come from China. So, you know, if you look at the supply base we have, it is globalized. You know, if you look at folks from Europe, our suppliers have people going from all over the world or going to these different suppliers, and it's a mature industry, so the supply base is somewhat matured. So you'll see finished goods typically built in the market, but then because different expertise, we get certain kind of gaskets, you have to get them from Germany. That's where they have the technology. If you buy a front-load washer, typically it might be a German gasket that's in there. So that's an issue because they're all over the world we deal with.

We're going to go right here to this gentleman who's got the mic. That was good prepositioning.

Rep. Thomas, as somebody who loves chewable ice, I've been on the fence for an Opel for a while. I think you've already made I'm going to go back and get that.

Yeah, great. Local sales are surging.

FirstBuild is— I think it's just in Louisville. If you talk a little bit more about how it's doing and whether you see it as maybe growing outside.

Great, and we'll wrap up with this.

Yeah, so FirstBuild, you know, started in Louisville. It's actually an innovation center. We're actually making money. They turned in, you know, profits last month that were exceeding budget. So it's doing very well in Louisville. We've opened one up in Shanghai, China, and we're about to open one up in Hyderabad, India. And what's interesting is it's focused on local markets. So in China, they're looking at how do we solve local issues, how do we work with the community, how do we work with the communities in India. So FirstBuild's been successful. I really think it's the future of innovation. It's the future of, I think, how R&D should be done. But we're very pleased with it. Great. We're looking to partner with other companies. You know, we think every company should have a FirstBuild, so we're inviting companies and introducing them to this kind of platform. But we're also in the effort to globalize it right now.

Well, I want to thank Kevin Nolan. When we were putting on this summit and just recently looking at the fact that I very much wanted a private sector voice, but not a predictable one with a predictable situation and doing kind of weird things, I love Kevin Nolan. I don't know if that's good or bad. So I want to thank Kevin Nolan so much for joining us today and flying up to Louisville for this. Thank you very much. Kevin Nolan, GE Appliances.