GE chief Jeffrey Immelt optimistic about new partnership with Saudi

Jeffrey R. Immelt, General Electric’s chairman and CEO, is a tall, charming man, cracking jokes easily, but is all business when the conversation turns to growing his company in partnership with Saudi Arabia.

In an exclusive, wide-ranging interview with Arab News on Monday, he made it clear that Saudi Vision 2030 is the correct strategy for the Kingdom. “These are the right ideas,” he says. He believes that the next 12 months are important for the country, and the government should move quickly.
Businesspeople should not be afraid to act, he advises. “People have to understand that if you want to be successful, you have to keep investing even in uncertainty,” he says.
He says GE believes in globalization as a force for good. “Our model is robust against protectionism, politics, everything else. We run our company to be intensely global. We believe in globalization as a force for good and it doesn’t matter who becomes the president of the United States,” he says.
According to his official biography, Immelt is the ninth chairman of GE, a post he has held since 2001. He has held several global leadership positions since arriving at GE in 1982, including roles in GE’s Plastics, Appliances, and Healthcare businesses. In 1989, he became an officer of GE and in 1997 joined the GE Capital Board. A couple of years later, in 2000, he was appointed president and chief executive officer.
Immelt has been named one of the “World’s Best CEOs” three times by Barron’s, and since he began serving as chief executive officer, GE has been named “America’s Most Admired Company” in a poll conducted by Fortune magazine and one of “The World’s Most Respected Companies” in polls by Barron’s and the Financial Times.
He is a member of The American Academy of Arts and Sciences. He earned a BA in applied mathematics from Dartmouth College in 1978 and an MBA from Harvard University in 1982. He and his wife have one daughter.
While in the Kingdom he announced new strategic partnerships and localization initiatives to support Saudi Vision 2030. He underlined GE’s commitment to Saudi Arabia’s socio-economic progress under the new development strategy, which aims to position the country as a strategic global hub that serves the three continents of Asia, Africa and Europe.
The new initiatives build on the $1 billion investment delivered by the company in the past three years in Saudi Arabia. Joint investments of SR3.75 billion ($1 billion) will be rolled out by 2017, in addition to an aggregate potential investment of SR7.5 billion ($2 billion) to drive projects in water, energy, aviation, digital and other sectors from 2017.

Following are excerpts from the interview:

Q: You had meetings in Jeddah with Energy, Industry and Mineral Resources Minister Khalid Al-Falih and Economy and Planning Minister Adel Fakeih. Can you share some details of what transpired during those conversations?
A: We just outlined the investments with them. I asked them their views on Saudi Vision 2030. How should it happen? What is most important? I was able to hear from them how the Vision 2030 is taking place. It is still early days. I expressed from my side how important Saudi Arabia is and the investments we want to make. I have known both of them for a long time. Such meetings are a way of keeping the relationship going and putting more focus on what is happening here in the Kingdom.

Q: What is the sense you got about where the Kingdom is heading?
A: It is just the intent that exists that how real this is. They are trying to break down barriers. They are really working together across the departments in the Kingdom. I love this spirit. The vision is 100 percent right. Now the question is: Can they execute? There is more positive pressure on the system today than I have ever seen in the time I have come here. There is a sense of urgency to create a better future.

Q: What is your advice to the government?
A: Move quickly. The first step is always the hardest step in any change process. What are the concrete steps that they want to see made? When do they want to do them? The next 12 months are very important. My advice to them is to move quickly.

Q: What do you make of Vision 2030?
A: I think there has always been potential to do more industrialization in Saudi Arabia. If you can really make this a regional hub in the next 15 years, I think that is really an advancement. This has always been a religious hub. If you can really make things here and ship them all over the region that would be a game changer for the country.

Q: How can GE contribute in the area of infrastructure development?
A: There has always been a lot of activity in power, oil and gas, water. My own view is that health care should be a much more robust industry in the Kingdom. I will always view that as being good potential. I actually think that military aviation, the notion that some of this can be localized in the Kingdom, is also really critical. Some of them are already quite well developed but some others like health care and aviation are just underdeveloped. More could happen here.

Q: During a presser earlier in the day, you spoke briefly about military equipment being manufactured here. Can you please elaborate a little on that?
A: We will start with the things that are pretty straightforward, like localizing maintenance repair operations. And we have announced that. I am quite open to seeing if we can actually bring some manufacturing or at least some capability into the Kingdom along those lines. I had a discussion last night about this company called TEI in Turkey which started as an offset agreement with the Turkish military. It has turned out to be a very strong aviation manufacturing company over the past 15 years. I think something like that could take place in Saudi Arabia as well.
Q: What can be done in the transport sector?
A: One of the things that we discussed was focused on building some of the ports. Even more significantly, in doing some rigs for the oil and gas industry in the ports. I think there are some opportunities there as well.

Q: From your company’s point of view, are low oil prices good or bad?
A: We never really try to tie in where the oil prices are. To me, it is a cycle. You manage your way through the cycle. My view is that prices go down (and then) they go back up. You have to have a long-term view of where the country is going to have the right perspective.

Q: What are the growth areas for GE?
A: The world spends about $1 trillion on infrastructure every year. We still see good opportunities for renewable energy, transportation. The aircraft industry is booming. We think the oil and gas industry might offer some good M&A activity as the prices are low. We sell in 180 countries around the world. Some are good, some are bad. Probably the company’s most important initiative right now is that of digitizing our industrial platform. That is very strategic.

Q: What are the growth countries for you?
A: We see China being better. India is quite good right now. The US is not bad. Europe seems to have stabilized and is actually improving. We see a lot of growth in the Middle East and North Africa. Then there are countries like Brazil that are going through a very tough economic cycle right now. There are growth opportunities everywhere.

Q: There has been a lot of talk about protectionism during the US presidential nomination process. As the head of the world’s leading global conglomerate, what is your view on what is being said by the presidential candidates, especially Donald Trump?
A: We have run a strategy that is unique to GE. We are very local in all the places we play. Our model is robust against protectionism, politics, everything else. We run our company to be intensely global. We believe in globalization as a force for good and it doesn’t matter who becomes the president of the United States. Our philosophy will remain the same.

Q: Saudi Arabia is facing many challenges and there is a palpable sense of unease in the business community as to what will happen next. They seem to be holding back on investments. What is your advice to them?
A: People have to understand that if you want to be successful, you have to keep investing even in uncertainty. What the entrepreneurs have to do here is they have to say maybe now is the time when you have to take more risks than you are normally used to. Whether it is in Saudi Arabia or anywhere else, if you are waiting for complete clarity, you are going to wait for a long time. Make volatility your friend and try to find ways to invest through the volatility.

Q: We have seen the emergence of a young, dynamic and forceful leadership in Saudi Arabia and in the region. How do you view this?
A: I think that is the promise. It is the reason why Vision 2030 is so important. It is not just in the Kingdom. It is everywhere. Young people want a different future. They want to take control of their own future. They want to start their own companies and things like that. I think that creates a healthy pressure on leadership to want to deliver for them. The deputy crown prince being a force for young leaders is quite appealing for the Kingdom and quite appealing for global investors as well.

Q: As the head of GE, what keeps you up at night?
A: I always worry most about the things we control. Do we execute well? Can we recruit young people? We live in a time of great geopolitical volatility. How will all this unfold. Terrorism, protectionism, things like that, that make it just a more uncertain world.

Q: You also spoke about providing a thrust for SMEs. How can GE energize the SME sector?
A: There should be robust development of small and medium enterprises as we industrialize. Big companies have to lead. At GE, we depend on a very active supply chain.

Q: You are the first company to endorse Saudi Vision 2030 in such a big way with such a big investment.
A: We are just long-term players. Anytime a country believes in helping itself, it can count on GE as a friend. We have a broad reach and we have a long-term history. We try to leverage those things when a country is going through the kind of exciting transformation that the Kingdom is going through.

Q: There is a great deal of talk in global business circles about Saudi Aramco’s planned IPO. What is your view, especially since you have been dealing with the company for a long, long time?
A: You frequently find that national companies may not be as well run as the Exxons or the Chevrons of the world. In the case of Saudi Aramco, it is extremely well run. It is the best-run company. Regarding the IPO, if that is a good strategy for the Kingdom, I think it can only be a very valuable company in the future. The Saudi Aramco leadership team is quite strong.

Q: How do you stay ahead of the competition?
A: Never take anything for granted.

Q: One last question, what is your advice to young men and women who are reading this interview?
A: Be entrepreneurs. Take risks. Drive growth. Keep learning. Stay optimistic. Take my job someday.

Source: Arabnews