General Electric Company (GE)

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GE Infrastructure's revenues, 2002-2006

[edit] Products and Services

• Aviation
  • GE Infrastructure's Aviation division produces jet engines for commercial, corporate, marine, and military clients. In August 1996, GE and Pratt & Whitney joined to form the Engine Alliance, a 50/50 joint venture which supports modern technology to create, manufacture, sell, and finally support new long-range aircraft.
• Aviation Financial Services (GECAS)
  • GECAS provides leasing services to clients through its portfolio of commercial, regional, and freighter aircrafts. It also structures financial plans for clients who wish to purchase an aircraft. Additionally, GECAS leases jet engines and trains pilots. GECAS owns 1419 aircrafts and manages another 300, which they lease to over 230 airlines in 70 countries.
• Energy
  • The energy segment of GE Infrastructure provides renewable energy products including wind turbines, nuclear energy reactors, solar panels, and so forth. The segment also provides training in the use of its products, as well as financial management plans to make the transition to renewable energy as affordable as possible.
• Energy Financial Services (EFS)
  • EFS invests heavily in the improvement of energy and water technologies. Being a part of GE's Ecomagination project, EFS heavily emphasizes renewable energy and cutting the emission of pollutants.
• Oil & Gas
  • This segment of GE Infrastructure provides oil- and gas-related products including pipelines, gas turbines, and valves. Furthermore, it also offers services aimed at maintaining the safety and efficiency of its products.
• Transportation
  • GE Infrastructure, under its transportation division, makes locomotives (as well as rail engines), rail signaling lights, mass-transit systems, mining trucks, marine engines, drill motors, and diesel energy generators. The division also sells maintenance services for its transportation products.
• Water & Process Technologies
  • GE's Water & Process Technologies division provides water treatment materials and chemicals, filtration technology, remote water-monitoring technology, and a variety of training and other services.

[edit] Trends and Forces

[edit] Airline Industry

Since most commercial airlines lease their fleet of airplanes from other firms, GE's aircraft division (including its engine-manufacturing business) is somewhat tied to conditions in the airline industry. Therefore, events such as 9/11 and the sharp increase in oil prices, which can harm airlines, can also have a negative impact on GE. On the other hand, rising fuel costs can stimulate demand for more efficient technologies. Several airplane manufacturers have adopted GE's environmentally friendly engines as a result of rising oil prices. GE produces one of the only two engines that will be used in the Boeing 787 Dreamliner and the Airbus A350.

[edit] Environmental Responsibility

GE Research and Development

Alternative Energy Supply Transition

Both federal and state agencies have put pressure on GE to clean up its operations' wastes. The annual cost of this environmental cleanup has risen sharply, doubling from $100 million in 2005 to $200 million in 2006.

GE has also started a project known as Ecomagination, reportedly investing $700 million in 2005 for cleaner technology research. The initiative has created products such as:

• L2500+Marine: an airplane engine that reduces emission of nitrogen oxide by 62% and sulfur dioxide by 93%.
  
• Evolution Series Locomotive: this locomotive uses a 12-cylinder diesel engine that produces the same amount of energy as its 16-cylinder predecessor while emitting 40% less nitrous oxide.
  
• Earth Rewards Platinum MasterCard: a credit card that rewards customers with cash back while donating a percentage of purchases to environmental organizations.
• Compact fluorescent lighting.

Products and services resulting from Ecomagination research earned $6 billion in 2004, $10 billion in 2005, and $12 billion in 2006. In 2006, GE spent a total of $900 million on green-technology R&D.

[edit] Alternative Energy

Industrial revenue rose 13% in 2006, due in part to an increase in the sales of power generation equipment. The financial and environment costs of oil are driving the ever-growing market for alternative energy sources, which benefits GE's energy business. In particular, GE's revenues from the sale of wind-powered turbines have more than quadrupled in the past four years. In addition to producing wind turbines, GE has increasingly bought ownership stakes in wind farms, having invested $4 billion in such facilities as of summer 2008.^[1]

[edit] Water Supply

GE has positioned itself in the water purification and recycling markets, which is among the fastest growing segments of the water industry. Most of the global water market includes infrastructure products such as pipes and storage systems. GE, however, has no interests in these segments, instead focusing on the purification and recycling side of things. Concerns over a possible global water shortage have led some to believe that this particular area will become increasingly more significant in the global market for water. If this were to happen, GE would be well-placed to gain from this increased demand.

[edit] Competition

Wide-body jet engine orders, by manufacturer

Aviation industry

GE's main competitors within the airplane engine industry include Britain's Rolls-Royce and Pratt & Whitney. This particular industry is intensely competitive, leading to fierce price competition between manufacturers. In fact, GE and its competitors often sell their engines for less than they cost to produce, all to maintain market share. Only after several years do engine sales become profitable, when maintenance, repairs, and spare parts make up the price difference.

Leasing companies' fleet sizes, 2006

Within the leasing industry, GE's Commercial Aviation Services competes against the International Lease Finance Corp (ILFC) and AWAS. AWAS is owned by European private equity firm Terra Firm, and ILFC is owned by American International Group (AIG). In May 2007, Terra Firm purchased Pegasus Aviation Finance Company and merged it with AWAS, forming the third-largest aircraft leasing company in the world. GE, however, has something of an advantage over other airplane lessors due to the fact that it also manufactures airplane engines. As a result, GE benefits from the lease of any plane that uses a GE engine, including planes leased by its competitors.

Energy systems

GE is the single largest manufacturers of natural gas power systems, with a global market share of around 40%. Other large players are Alstom and Siemens AG (SI), with nearly 30% and 20% market shares, respectively. GE's share of the wind energy business stands at around 15% of the global market, after competitors Vestas and Gamesa. Its 2002 purchase of Enron's wind assets has positioned GE for future expansion into this renewable energy market.