General Electric (GE) is focusing on Middle East nuclear power and rail projects as the next areas of growth in a region where it generated US$6.7 billion (Dh24.6bn) in revenues last year. Rail programmes in the UAE, Saudi Arabia and elsewhere have led to estimates for new projects topping $100bn, while another five nations are also expected to proceed with civilian nuclear power schemes.
This follows the UAE's move to become the first in the region to commit to nuclear energy after awarding a $20.4bn contract to a South Korean consortium last December. "Rail was not a significant industry in the past, certainly not in the GCC, but now it is picking up as a key market," said Nabil Habayeb, the president and chief executive of GE's Middle East and Africa operations. "And in the next five years, for countries that are going to go [with nuclear energy], we would like to be part of that."
GE has conducted business in the Middle East since the 1930s and considers its core businesses to be oilfield services, gas turbines for power and water plants, jet engines in aircraft and medical devices. Its operations in the region consistently delivered double-digit returns up to the start of the global downturn, Mr Habayeb said. "Although we remained flat in terms of revenue growth in 2009 compared to the previous year, our growth in the last five years has been on average 25 per cent per year," he said.
In 2004, Middle East and Africa accounted for $3bn in revenues and 1,200 staff for GE. Last year the region generated $10bn in turnover and it now has 3,400 employees. That translates to about 6.4 per cent of global revenues and 10 per cent of staff for the multinational. During the recession GE cemented regional partnerships and other "localisation" initiatives in Saudi Arabia, Bahrain, Qatar and the UAE.
In July 2008, it announced a wide-ranging initiative with the UAE capital and Mubadala Development, a strategic investment company owned by the Abu Dhabi Government. This includes an $8bn commercial finance venture and other joint investments in carbon-free energy, oil and gas, aviation and executive education. Mubadala GE Capital, as the commercial finance company is called, received its licence last year and is up and running, Mr Habayeb said.
GE will set up its first "ecomagination centre" outside the US in Abu Dhabi's carbon-neutral Masdar City, which has been delayed. The centre will display GE technologies in wind and solar power, and other renewable energies. The partnership will also see Mubadala set up a repair facility in Abu Dhabi for GE's newest class of jet engines, the GEnx family - the first such centre outside the US. And in the third quarter of this year GE and Mubadala will open a corporate learning centre in Abu Dhabi to train current and future generations of the region's business leaders.
Mr Habayeb said GE had been disappointed at missing out on the contract to build and design the UAE's four nuclear reactions but felt it was a transparent and open process and believed there were other emerging opportunities. Saudi Arabia, Qatar, Jordan, Egypt and Morocco were expected to follow in the UAE's footsteps, he said. Much will depend on whether they sign agreements such as the US-UAE 123, which permitted American firms to discuss sensitive nuclear technology with foreign countries.
In rail, GE will submit bids this year to the UAE to supply locomotives and signalling products for the planned 1,500km network of freight and passenger services. igale@thenational.ae