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GE Technology Infrastructure (27% of total GE revenue, 31% of profit)[1][2] focuses on the development of transportation and technological infrastructures. This segment includes GE Aviation, which produces and sells jet engines and other parts for military and commercial aircraft. GE Transportation provides technological parts, such as locomotives and engines, to the railroad, marine, and transit industries.[3] GE Enterprise Solutions helps customers increase their productivity through information management and automation solution. GE Healthcare provides medical technologies and services to the healthcare industry.
Technology Infrastructure revenues decreased 8%, or $3.8 billion in 2009 as lower volume and the stronger U.S. dollar were partially offset by higher prices and higher other income, primarily including gains on the ATI-Singapore acquisition, dissolution of the joint venture with FANUC Ltd and the Times Microwave Systems disposition. Higher prices, primarily at Aviation, were partially offset by lower prices at GE Healthcare. Segment profit decreased 8% to $7.5 billion in 2009, compared with $8.2 billion in 2008, as the effects of lower volume ($1.0 billion) and lower productivity ($0.4 billion) were partially offset by higher prices ($0.5 billion) and higher other income ($0.4 billion), primarily including gains on the ATI-Singapore acquisition, dissolution of the joint venture with FANUC Ltd and the Times Microwave Systems disposition. The decrease in volume was across all businesses in the segment. Lower productivity at Transportation and Enterprise Solutions was partially offset by Aviation.[1]
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Products and Services
Aviation
GE Technology 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.
Enterprise Solutions
In 2007 GE announced the formation of GE Enterprise Solutions, consisting of the various GE Industrial businesses other than GE Consumer & Industrial, as well as GE Power Quality. The company says the new unit will help its "global customers increase their productivity through superior information management and automation solutions." Enterprise Solution's sub businesses are:
- Sensing & Inspection Technologies
- GE Fanuc Intelligent Platforms
- Security
- Digital Energy
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.
Healthcare
GE Healthcare provides medical technologies and services that are shaping a new age of patient care.[4] GE Healthcare has expertise in medical imaging and information technologies, medical diagnostics, patient monitoring systems, performance improvement, drug discovery, and biopharmaceutical manufacturing technologies.
GE Healthcare's broad range of products and services enable healthcare providers to better diagnose and treat cancer, heart disease, neurological diseases, and other conditions earlier.
Trends and Forces
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.
Competition
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.
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.
References
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