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GE Chairman Jeff Immelt in his interview with Fortune magazine said something really insightful today which tends to get lost in the jobs discussion. Yes, it is right that most jobs are created by small business but how do they do so?
Most of these small businesses are B2B suppliers in the supply chain to big businesses. Recent perceptions of Government populist bashing of big business (Health Insurance,Banking and Finance,Auto, yes and the extraordinary BP bashing etc.) has made them nervous about putting out the money to expand. But if companies like GE start hesitating on building a new plant a whole host of small businesses who supply to the plant either equipment,construction workers or raw materials and spares suddenly have no work and so no hiring. What's interesting is that the local sandwich lunch place gets no business and folks have no money to spend on a trip to the Gulf and help bail out the tourism industry after the oil spill. In other words, small businesses mostly live by supplying to large businesses.
So large businesses need to get a break and not feel anxious that the public and government will go after them for the smallest infraction. Check the news everyday and you'll find there is some big business bashing story that is making headlines. It's just the climate but the point is that this does'nt help confidence and does'nt lead to small business growth and jobs.
Jeff Immelt has direct access to President Obama and Immelt assures that there is going to be more focus on the economy and jobs going forward. To do this everyone needs to back off from instinctively bashing big business for any mistake made. Also once a business sector corrects mistakes it must move on and not get stuck as with the few takers in the mortgage market despite the record low rates of mortgages. But I'll write about the current semi-frozen mortgage market tomorrow.