Intel's Otellini: U.S. Can Bring Jobs Back From Overseas7:34 PM EST Tue. Oct. 02, 2012
Paul Otellini used his keynote presentation at the Intel Capital Global Summit to focus on his view of worldwide economic trends instead of focusing on Intel's vision or its investment plans.
Otellini, Intel's president and CEO, engaged in a question-and-answer presentation with Tom Campbell, Dean of the Law School at Chapman University in Orange, Calif., and former U.S. Congressman, on how U.S. and world economics are impacting the business environment while touching on issues that are at the center of the economic debate in the upcoming U.S. presidential elections without mentioning the elections themselves.
The Intel Capital Global Summit is an annual event that brings companies in which Intel Capital has invested together with potential investors, customers and partners.
Otellini said that, of all the economic indicators that are regularly discussed, the scariest one is the unemployment rate.
"You need 350,000 jobs [to be created] per month to get back to normalcy, and we're not getting that," he said.
Otellini also said he is closely watching the drop in consumer sentiment and in CIO sentiment, noting that the rise in productivity that had been seen until recently seems to have run its course, which is part of the normal cycle. However, he said, CIOs are worried about the future.
When asked about the Federal Reserve Bank's easing of the money supply as part of the current third round of quantitative easing, Otellini said he is concerned about what that will do to the business environment. "None of us would run our own companies or our personal lives based on the Fed," he said.
He explained that the expanding money supply is keeping borrowing costs low, but that money markets, now flush with cash, are remaining on the sideline and are getting little or no rate of return on their holdings. The result, he said, is a lot of money coming to the U.S. but not being put to work. "It's a shame," he said.
In addition to all that capital sitting in the U.S., the country also has a well-trained and highly educated workforce as well as a stable political environment, giving it a unique opportunity to turn the economic discussion away from the problems of outsourcing and instead focus on bringing jobs back home, Otellini said.
"It's important for leaders to speak out. ... We need to reduce the uncertainty and bring the money back," Otellini said.
NEXT: Otellini Calls On Govt. To Reduce Business Uncertainty
That includes uncertainty related to over-regulation in such areas as environmental concerns, banking concerns and healthcare, Intel's Otellini said.
For instance, Chapman University's Campbell asked Otellini about such issues as the Environmental Protection Agency now having regulatory authority over carbon dioxide output and the Dodd–Frank Wall Street Reform and Consumer Protection Act providing for a new Consumer Protection Bureau, which can act against businesses without Congressional authority.
Otellini said that such uncertainties mean that industry has cheap money, but not easy money. He explained that customers and distributors can't get loans to carry inventory and that investment in the U.S. is restricted by regulations. Healthcare is also a big regulatory overhang. "Business people don't like uncertainty," he said. "The more variables are uncertain, the harder it is to make decisions."
Otellini also said that corporate tax rates in the U.S. are among the highest in the world, a fact that retards the ability of companies to bring cash from overseas to the U.S. He called for a lower, more competitive tax rate combined with the elimination of tax loopholes.
Otellini did say there are new opportunities to bring high-end jobs back to the U.S. from places like China and India thanks to the rising cost of doing business in those countries.
For instance, the cost of working with mid-level engineers in those two countries is similar to that of the U.S., whereas the cost of working with senior-level management is becoming higher than in the U.S., because of the fact that such personnel with strong English-language ability and management experience are rare.
When asked whether he was bullish on the State of California, Otellini answered in the negative.
"Oh God," he said. "I was born in California and raised here. But, we've messed it up so much. ... I'm afraid the abyss will be like Greece."
Otellini said that Intel has not increased headcount in California in the last 10 to 12 years and has closed its last factory in the state. Employees cannot afford to buy a house in California, and they complain about their local schools. "If it wasn't for the magic of Silicon Valley, there would probably be a net [population] exodus," he said.
PUBLISHED OCT. 2, 2012