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GE Technology Infrastructure (33.5% of Revenue)[1]: 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.[2] GE Water manufactures pumps, filters, and other equipment needed in water treatment and desalination systems. [2]
This reporting segment also includes GE Healthcare
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Products and Services
Trends and Forces
Airline IndustrySince 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.
Water SupplyGE 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.
CompetitionAviation 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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