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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
- 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.
- 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.
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.
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.
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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