The GE Brief: March 11, 2021
MORE FOCUSED, SIMPLER, STRONGER
Larry Culp has been on a mission to transform GE ever since he became the company’s chairman and CEO in late 2018. GE took another big step down the transformation path Wednesday by agreeing to combine its aircraft leasing business, GE Aviation Capital Services (GECAS), with Ireland’s AerCap. Valued at more than $30 billion, which includes $24 billion in cash and some $6 billion in a 46% stake in the combined business, the transaction will create one of the industry’s largest franchises for leasing planes, engines and helicopters. But Culp said “the real story for the shareholder” is less about the transaction and more about what it means for the future.
Playing offense: Describing the deal on the annual GE Investor Outlook call on Tuesday, Culp said it will help GE reduce its debt, accelerate its transformation, and allow it to play offense. “This deal marks our transformation into a more focused, simpler and stronger industrial company with leading positions in power, renewable energy, aviation, and healthcare,” he said. “Over the last two-plus years, we’ve been strengthening GE, improving our performance, operations and culture. Coupled with this transaction, we are reshaping our foundation to continue driving sustained improvements.” Carolina Dybeck Happe, GE’s chief financial officer, said once the deal closes, the cash will help GE cut its debt by about $30 billion, bringing its cumulative reduction to $70 billion since the end of 2018.
For more on what Larry Culp had to say about GE’s outlook, click here.
Another reason GE is able to play offense is an arsenal of new technologies that help address some of the biggest challenges facing the world today, including the energy transition, climate change and the pandemic. Engineers are using materials science, artificial intelligence, data analytics, 3D printing and a host of other technologies to chart the way for the energy, aviation and healthcare industries, to name a few.
Edison’s descendants: For example, GE is working on the first purpose-built power plant in the U.S., where a turbine from the company’s most advanced turbine fleet — the HA — will start burning a blend of natural gas and hydrogen and aims to transition to 100% hydrogen by 2030. At first, hydrogen will constitute 15% of the overall fuel mix going into the turbine in the Hannibal, Ohio, plant with aims to increase that proportion over time, which would eliminate approximately up to 1.6 million tons of CO2 emissions annually. And this is just one example of what the future might look like. We could go on and on. In fact, we have — read more here.
NORTH SEA POWER
A new GE plant in northeast England will soon be making the world’s longest wind turbine blades to date. Measuring 107 meters from tip to root, the blades are a key component of GE’s Haliade-X, the most powerful offshore wind turbine in operation. LM Wind Power, a subsidiary of GE Renewable Energy, will build the plant in Teesside, an industrial port on England’s North Sea coast. Workers at the plant, which is scheduled to open in 2023, will supply blades for Haliade-X turbines at the planned Dogger Bank Offshore Wind Farm. When completed in 2026, Dogger Bank is expected to be the world’s largest offshore wind farm with a planned installed generation capacity of 3.6 gigawatts.
Revving up: GE estimates the Teesside factory could create as many as 750 direct jobs (and up to 1,500 indirect jobs) in the area when it opens in 2023. It will support the U.K. government’s plan to develop jobs, infrastructure and supply chains to commission 40 gigawatts of offshore wind power by 2030 and become a global leader in renewable energy. “This new plant will contribute to the development of an industrial cluster dedicated to offshore wind in the northeast of England,” says Jerôme Pécresse, president and CEO of GE Renewable Energy.
Read more here about GE’s Haliade-X wind blade plant being built in the U.K.
GE Renewable Energy is harnessing lean management principles to overhaul how it maintains its network of onshore wind turbines.
— QUOTE OF THE DAY —
“Scaling lean and shifting decision-making closer to our customers are helping us execute better and transform our culture — so that these improvements are both continuous and lasting.”
— Larry Culp, chairman and CEO of GE
Quote: GE Reports. Images: GE, GE Aviation, LM Wind Power.