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Observations

Opinion, arguments & analyses from the editors of Scientific American

Cisco, GE and Xerox CEOs: 4 challenges facing U.S. industry, and how to fix them

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CES, Xerox, Cisco, GELAS VEGAS—Chief executives from some of the world's largest companies laid out the keys to developing the next generation of innovative technology during Friday's opening panel discussion here at the 2011 Consumer Electronics Show. Education, immigration, taxes and export policy all need to be fixed to allow the U.S. to continue to flourish in the face of global competition, agreed Xerox CEO Ursula Burns, Cisco CEO John Chambers and GE CEO Jeffrey Immelt.*


Although the U.S.'s universities are still the strongest in the world, the country gets a "D minus" for grades K through 12, Burns said during Friday's panel. "I don't think we can pretend to be better than we are," she said. Chambers pointed out that American K through 12 education is not even ranked in the top 20 worldwide in terms of performance in math and science, something that will impact U.S. businesses down the road. Immelt remarked that this country turns out far more sports therapists than engineers.


Tied closely to education is immigration, as all three CEOs lamented the difficulty in hiring foreign students after graduation. "We are telling people today that they are not welcome here," Chambers said. Instead, the U.S. should offer citizenship or at the very least green cards to visiting students trained at the country's universities. Burns noted that the economic downturn of the past few years has made it easier to ostracize workers seeking jobs in the U.S. "The last thing we need is to do that," she said. "We have 300 million people here (out of the world's population of 6 billion); we can't block out the rest of the world."


In the same sense, the U.S. government needs to be more open to doing business with the rest of the world, the CEOs said, particularly because that's where most American companies are finding revenue growth. Immelt said that 60 percent of GE's revenue comes from customers outside the U.S. Cisco and Xerox get 55 percent and 50 percent of their revenues, respectively, outside the U.S. Burns said, "My preference is to hire good people wherever they are. We want to be close to our customers."


The CEOs pointed to taxes as another barrier to growing business in the U.S. Chambers expressed a preference to hire in the U.S., but said that "everything is working against it." Cisco has more money invested overseas than it does in the U.S. If the company tries to pull that money back into the U.S. to invest here, however, it gets double taxed, he explained. "We already pay taxes on that money in Europe, China, India and elsewhere," he said. "If we bring the money back to the U.S., we likewise have to pay U.S. taxes on it." Immelt added, "What good is it doing the U.S. today for GE to have a trillion dollars outside the U.S.?"


With regard to exports, Burns pointed out that other countries are busy signing trade agreements with one another while the U.S. drags its feet. If the U.S. doesn't trade with other countries, then businesses here can't create new markets for their products or new jobs for workers. The CEOs cited the difficulty with which the U.S. government has nailed down a trade agreement with South Korea, already the U.S.'s seventh-largest trading partner. That agreement, reached about a month ago, still needs legislative approval in both countries.


This all ties in to CES in the sense that big U.S. companies like Cisco, GE and Xerox invest in the research and development needed to make the products that show up on the show floor here. Burns noted that Xerox invests 5 percent of its revenues into R&D, for example.


Of course, there are many sides to the debate over how businesses in the U.S. should be treated by the government, particularly in light of a less-than-stellar past decade of corporate behavior—Enron, Worldcom/MCI and Tyco come to mind.


Image (left to right) of Consumer Electronics Association (CEA) CEO Gary Shapiro, Xerox CEO Ursula Burns, Cisco CEO John Chambers and GE CEO Jeffrey Immelt, courtesy of Larry Greenemeier/Scientific American

*Editor's Note (1/24/11): This was edited after posting. It originally referred to Ursula Burns as Ursula Barnes.

The views expressed are those of the author and are not necessarily those of Scientific American.

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