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At GE every day ... there's a new way

By SIRAJ WAHAB RIYADH: General Electric Vice Chairman John G. Rice, 54, describes Saudi Arabia as one of his company's largest and most strategically important world markets. "After all this is our eighth decade in the Kingdom," he says right at the beginning of this interview conducted at the Al-Faisaliah Center in the heart of the Saudi capital.

The sun has just gone down and sitting where we are, the view from the Al-Faisaliah tower is a visual delight - Riyadh is bathed in bright shimmering neon lights. It is one of those magic moments that you encounter when you land in Riyadh at night. Most of the engines that power this magnificent illumination come from GE, the 130-year-old American conglomerate whose massive turbines are located on the outskirts of Riyadh at one of Saudi Electric Company 's power plants. For the record, GE helps generate nearly half of Saudi Arabia's electricity.

This is just one example of the company's large and vitally important presence in Saudi Arabia. Its Saudi journey began 80 years ago when GE provided the Kingdom with its first turbine for oil exploration. Since then it has consolidated its presence in many different areas from energy and aviation to water and health care.

Besides being the vice chairman, Rice is president and chief executive officer of GE Global Growth and Operations. He is an economics graduate of Hamilton College in Clinton, New York, and is currently based in Hong Kong. He is generally described in the media as an energy veteran, and has been with the company since 1978. He sits on the international advisory board of the Dhahran-based King Fahd University of Petroleum and Minerals ( KFUPM ).

"At GE, we have to get up everyday thinking about a new way. We can never accept the status quo. We can never assume that we have it figured out," says Rice while describing the ways his company adopts to maintain its edge as an industry leader.

The following are excerpts from the interview:

Q: Thank you, Mr. Rice, for talking to Arab News. First things first, can you please tell us what brings you to Saudi Arabia at this time?

A: We have many business interests here. We always have things to work on and talk about, whether it is in the power and water generation, oil and gas, health care or aviation sectors. We have no shortage of things to work on and no shortage of activities in Saudi Arabia. One of the reasons for my visit to Saudi Arabia is to discharge my responsibilities on the KFUPM advisory board which took me to Dhahran.

Q: GE has been in Saudi Arabia for quite long. Can you take us through the GE-Saudi relationship?

A: This is our eighth decade in Saudi Arabia. Historically, we have had a long and good partnership. We are proud of the fact that with all of the changes that have taken place in the Middle East, we have been a consistent, good partner of the Kingdom. Our work with the government and all of the ministries enables us to understand what the priorities are. We clearly understand that in order to be viewed as a strategic partner in the future, we have to work with Saudi companies and the government in creating local capabilities and more jobs for Saudis. We are doing that now and we plan to do even more.

Q: Can you please list, for the benefit of our readers, some of the most important projects that GE is currently executing in Saudi Arabia?

A: The Defense Ministry recently announced a massive multibillion-dollar aircraft procurement deal. This involves a significant number of our engines. Obviously, as part of that we are going to want to make sure that we have expanded our local capacity to take care of those engines and make sure that they are always maintained and serviced in the best possible way. We have a close collaboration with the Saudi Electricity Company ( SEC ) in terms of making sure that the country's power generating requirements are met and we have a number of activities in process in that regard. Our health care business, with the Ministry of Health, is very vital. We are working very closely with the ministry and we are focusing especially on women's health care, and specifically on breast cancer, because we know that is a priority for the government. Saudi Arabia is one of our largest and most strategically important markets and I am not speaking for only this region. This is a very important place for us.

Q: Are there any new power projects on the horizon?

A: Our relationship with Saudi Electricity is second to none. We are in continuous discussions with them about their expansion plans and about their current and future projects. It is a day-to-day activity now with the SEC and other customers. Whenever there is any expansion project, we are the first ones to discuss how we can provide our service and high-quality products. We have a majority share in the power generation capacity in the country. We view that as a very important responsibility in order to ensure that it is always operating at optimal performance levels and providing Saudi citizens with electricity as they need it.

Q: Saudi Arabia recently announced that it would invest $100 billion in 16 nuclear plants. GE must surely be looking at those contracts?

A: We have a nuclear business that we are very supportive of. We look carefully at the nuclear projects that are under way around the world and if the decision is made to consider boiling water reactor technology, which is the technology that we have, then we are very happy to take a look at those opportunities. Yes, we are engaged with the appropriate body in Saudi Arabia. Since the discussions are ongoing, it is not possible to talk more at this stage.

Q: Saudi Arabia has added new industries in petrochemicals as well as large-scale bauxite mining and aluminum production. Is GE playing a role in the development of these industries?

A: Certainly the mining as well as the oil and gas industries are very important for us. All of the processing work that goes with the extraction of those minerals is important from a power generation perspective. Aluminum smelters require a lot of energy and we obviously have a role to play. We have a broad range of technologies that are important to the companies that participate in those industries. We don't take things directly out of the ground but we provide a lot of equipment and technology that support the companies that do.

Q: Speaking of petrochemicals and aluminum, does the company plan on acquiring such materials for its global production facilities?

A: We are a big consumer of raw materials. We have a large interest in the world's iron ore because we consume a lot of steel ... because we consume a lot of those materials, we consume our share of rare earth minerals, and we are always very interested in them. We don't buy much of those minerals directly but they are consumed in the parts and the things that we buy. However, I don't see us investing in the extraction.

Q: Where are the growth prospects you see for your company?

A: Everywhere in the world. One of the things that the Arab Spring emphasized is the importance of solving issues for populations that have social and economic inequality. One of the ways to do that is to build the infrastructure. What does that mean? It means clean water because it is hard for people's lives to get better if you don't have clean water; it means power generation because the standard of living without electricity can't be very high; it means health care because if you don't have basic health care you are never going to feel like you have a satisfactory standard of living. These are all the businesses that we are in. So, for us, if you look around the world there are a billion-and-a-half or two billion people that lack access to basic infrastructure. Governments understand that it is in their interest, certainly in the interest of their populations, to build those infrastructural projects. And so, we see growth in many, many countries. And it is not just in what is called emerging or developing countries, you have people in the United States that do not have access to adequate health care. We have got to help them too.

Q: How do you view the current global economic scene?

A: It is difficult in some areas, ready for a lot of growth in other areas. Certainly, when you look at Europe, the economies there are going through some tough times. They are having difficulties, but I think they will work their way through it. Could they have a few difficult quarters and a few difficult years? Maybe. But these are countries that have been around for thousands of years. We as a company are going to work our way through this. One of the advantages of being in a company that is 130 years old is that we have seen a number of economic cycles. We have seen countries that have gotten into difficulty and at the end of the day worked themselves out of those difficulties.

Q: Since you are an energy industry veteran, can you tell us how the industry has changed over the years, especially in the Middle East and particularly in Saudi Arabia?

A: There is a lot more discussion now about alternative fuel sources. If you go back 10 or 15 years, you did not hear a lot about renewable, nuclear, solar or other forms of power generation. Now you do. This is because people recognize that it is smart to have a portfolio of power generation choices. Who can predict what the price of gas will be over the next 50 or 100 years? Is it going to go up? Is it going to go down? Technology developments in wind power generation, for example, have led to significantly larger wind turbines with much more technology as a result of which the cost of power generation has come down. Ten years ago the answer might have been, "It is too expensive. We are not going to consider it." Now everybody is considering it. Not just here but in many countries around the Gulf. I think the Saudi leadership has recognized that there has to be a consideration of all forms of power generation sources. And investments can and will be made, I think, in a number of them so as to complement the traditional power generation sources.

Q: How is GE training young Saudis to meet growing expectations?

A: We have almost 1,000 employees here and that number is up significantly from a few years ago. We expect to double that number over the next few years. We are not only investing in expanding our investment in GEMTEC (the GE Energy Manufacturing Technology Center in Dammam) but we are going to be investing in the Dhahran Techno Valley. We are expanding our collaboration with KFUPM and other schools. We are supporting scholarships and internships at KFUPM so that we put a real focus on creating capabilities that will allow us and other companies to fulfill the localization efforts that the government has asked us to make.

Q: What are the challenges that you at GE face in implementing localization goals and how do you tackle them?

A: We believe that in any country the way to increase capacity and jobs is through education. The development and creation of a skilled and trained work force -- whether that is somebody who operates a machine tool on a factory floor or somebody who is an entry-level engineer or someone who is the manager of the engineering department - is very important and crucial. We have to think about it from all angles. What are the high schools doing to create more people who are qualified to go to KFUPM ? What is KFUPM doing to train and develop people? How can young Saudi graduates get more international exposure so that if a company like ours wants to hire them they are comfortable in that environment. Companies like ours can help because we can create internships for students. Some of these can be in the Kingdom working in our facilities. Some of them can be in other countries. As an undergraduate, it makes a young Saudi better equipped to make choices: "Do I want to graduate from KFUPM and go work for GE or some other company? Or, do I want to go to KAUST or another institution to get my Masters or my PhD?" We think that somewhere during this development process more young Saudis are going to come out and be better equipped to fill the jobs that we have.

Q: What would you tell talented young Saudis who would want to join multinationals such as GE?

A: Here is what I will tell them. In working with GE I get to work with some of the world's really great people. A lot of companies have good people, but we have REALLY good people. I get to get up every day and learn new things and I get to work for a company that makes a difference. If you are going to work hard, why not work for a company that makes a difference? If you like to learn and like to grow, then we are a company which promotes meritocracy. We don't promote people based on seniority; we promote people based on their ability. With us you have the opportunity to grow globally if you want, or the opportunity to remain in Saudi Arabia and have a great career if you want.

Q: GE does have Saudi role models, right?

A: Yes, we do have Saudi role models. Here is one. (Rice points to the young and dynamic Waleed Abukhaled, GE's president and CEO of Saudi Arabia, who is sitting next to him.) We have others. Our goal is to expand our employee base in this country. We are also very interested in expanding our female work force. We already have a number of very talented Saudi females that work for us now.

Q: How does GE maintain its edge as an industry leader?

A: We have to get up everyday thinking about new ways. We can never accept the status quo. We can never assume that we have it figured out. We have to be the world's best learning organization. We have to have every one of our employees wanting to improve, wanting to learn and putting themselves in position where all of those are possible. As a company, we have to create an environment where that is supported. And we do.

Q: Final comments?

A: Look, I love this country. I think that in terms of leadership and significance at a global level, it is a very important place, not measured in terms of revenue or orders or employees, but just by what happens here and how it influences the rest of the world. For us it is critically important that we are the right partner. That means we continue doing some of what we are doing and also that we think about changes that we have to make in order to be an even better partner and prepare for the future. We cannot get up everyday and just do what we did yesterday. Some of that may be good enough but some of it isn't. We have to prepare for the future, and you don't do that by doing everything the same way you did in the past.

© Arab News 2012