INTERVIEW: Chairman of General Electric Jeffery Immelt says Egypt is 'big upside but not easy'

Chairman of General Electric Jeffery Immelt speaks to Al-Ahram in an exclusive interview

In a recent lecture at NYU (New York university), you talked about the "localisation strategy of GE" all over the world. So how do you see Egypt fits in such a strategy?
I think in many ways, Egypt is a perfect example of what I mean about globalisation. The passwords about these big global flows or trade POs or things like that. I think today it is much more about sovereign local problems so when I come to a place like Egypt, it is really trending in line I would say three streams of ideas.
One is the local need so you got need of electricity, need for healthcare, need for industrialisation, local modems and things like that
One is how do you finance it, so you need to try to get in line with global ACAs, export agencies, central banks. Remember the section of the speech when I talked about financing being kind of the lifeblood, if you will, of globalisation today.
And the third layer isjob creation, in many ways every country in the world the US, Egypt, Europe everybody needs to find ways to create work.
So my discussions when a person what I think successful this is how to do today is to connect those to be layers how to solve local problem how do you finance it how to create jobs. That has to be done really country by country. So the local team has to give me ideas and I help them to connect the dots.
Before leaving the "localisation strategy." You see the world in a different way because of "protectionism" policies in the US elections, and so the company is moving parts of manufacturing facilities out of the USA, one of these facilities is the multi-modal in Suez. Do you consider this as a trend in the future?
It will be much more about creating regional solutions, local and mutual solutions versus having one product that ships nicely around the world. So if we do, let us say, locomotives here in the multi modal facility. We will ship certain components from the US and assemble them here in Egypt.
They may create some jobs in the US but they will also create jobs in the local region. Then what you might be able to do in Egypt is haveproducts that you manufacturehere and you ship to the rest to the continent of Africa. I just think the world today is much more about these multi- local relationships, building new collaborations we join and trying to string that into a global framework, which we have in GE, a kind of unified strategy and things like that. It is a very different global flow today but Egypt in many ways is a great example of whatI talked about on Friday.
In the meeting with President Abdel-Fattah El-Sisi (on Saturday), what was the main issues of the discussion, and what is your impression on the discussion, and how the last meeting is different from earlier meetings?
The last time I met the President was in the early part of 2015, in the Economic Conference, in Sharm El-Sheikh, the focus at that time was specifically on “Power”.
It was a very focused discussion and subsequent to that we got secured on the power projects that came online in 2015 and 2016. I would consider that as a successful first step and what we talked about yesterday is we went to the next phase and think both sure in long-term again there is list of projects that we think are extremely meaningful to the people of Egypt having to do with infrastructure andproductivity.
We do believe we can come up with a financial solution in that context so we dig brain financing and then the third phase is the construction of multi model facility that can do the local assembly, the investment into software resources, shared-services in Egypt. So again project financing and job creation – that is what the President and I have discussed yesterday. And so there is a keen interest that we have in GE that we sense that there is a great opportunity to be very focused and helpful in Egypt right now.
Let's talk more about the multi model facility. I understand we can be an innovation hub for the region in the near future. This is your vision too?
Totally. Let talk a look at something like wind turbines. So one of the interests of the country is to diversify power generation. It is very hard to ship the components of wind energy around from North America, the US to the rest of the world. So, we look at Egypt as a very good hub particularly the Suez trade zone – it is a very good hub for wind turbines to see how we can do work not just for Egypt, for North Africa, for the rest of the continent, and for the Middle East.
Let's look at locomotives . Locomotives again is a very good way to bring global components into a place you can ship into new assembly in the Suez zone. Again many different countries in the region, in the middle east and Africa, need locomotives.
So Egypt has, you know every country is different, you have got tremendous education here - so you have got human resources and logistics. Those are two unique strengths we try to find that wethink can be invested in the country.
When you mention logistics, are you talking about resources that the Egyptian government offers, or your own facilities? And what are you doing to enhance the infrastructure?
You know again I think there is a little bit of both. If the government vision of the Suez economic zone takes place, it could be tremendous logistical hub for someone like us to ship our products to the rest of the continent and to the middle east, so I would view that as a government imitative.
You have a piece of logistics justmodernisation of rail lines.
So, my understanding from the team here, is that 0.7 percent of the goods travel by rail today. There is no industrial country on earth where you ship that many goods by truck, and can do so productively. So we bring a solution, but the government also has a very good framework by which you can invest in the country.
And you are still talking about almost 200 million dollars to be invested in this facility?
Yes, over time. Not all at once. Probably 4-5 different GE businesses that can be participants. When we say multi-modal, we mean a variety of GE divisions will participate – power generation, locomotives, oil+gas. So I think we are also trying to figure out ways to do things more quickly.
One of the ideas we have, and Egypt is not unique, is the energy efficiency installed in Egypt is low. It's old equipment. We're trying to come up with a solution where we can upgrade the power generation capability today. This would mean hiring software talent, working with smart business, doing the digital execution. Those are things that can be done quickly. Good results, job creation in the short term. It's going to take several years to build a factory, so we're trying to intersperse the things we can do more quickly and try to have a portfolio of different things we're working on in Egypt.
Your discussion with President El-Sisi, of course, included renewable energy technology, and the possibility of working with Egypt in the near future. How do you find this balance between working with Egypt on gas turbines and at the same time, working on renewable energy?
That's a good question. The first wave were gas turbines. One of the features of the first wave was getting power generation online quickly, which is something we were able to do using a certain technology with gas availability. Diversification is a good thing for the country. Whether wind turbines or clean coal, we think that's a good strategy for the country. It's one of our strengths – we can do several different technologies, and bring them to Egypt. We embrace having more than one kind of technology to execute on locally.
What is the share of renewable energy in your work activities all over the world?
Our renewable business is 9 billion dollars of revenue globally. Egypt would not be the biggest – but over time, it will be a very meaningful part of this revenue. Africa is growing quickly in wind – so when Egypt is a logistical hub for renewables, it will be attractive for GE.
20% of energy production is to come from wind farms by 2020, according to the Egyptian officials. Do you think this is reliable and can be met?
There are many countries, Europe's aspirations is 30 percent, 20 percent is not unreasonable in terms of a goal. I really believe that diversification is a good thing. Gas, coal, wind, that's a positive thing.
Oil exploration is attracting big partners in the past couple of years. GE is showing interest in investing in this. How do you see the potentials in Egypt?
There is a great deal of interest by global companies in oil exploration. We don't do exploration per se, we provide the equipment. Companies like BP, ENI – they are our customers. When I talk to many of the oil companies, they see Egypt in a very positive light. There will be more investment as it pertains to where the oil exploration business will go. I see this as a positive for the country over the long-term.
You had discussions with senior officials from the Egyptian Ministry of Aviation. How did you see the recent troubles in the aviation industry and how can your company work on solving it to reduce risks?
First and foremost I'd express my regrets to the people of Egypt, I think it's a great tragedy and my heart goes out to everybody who's affected. I think the most important thing is to find out what happened, we're in a critical phase right now where nobody knows what happened, so I think first things first let's find out what happened and then if there are potential solutions in terms of how to do anything better, that would take place once people really know what happened.
At a bigger picture, EgyptAir has been a customer of ours for a long time, Egypt has been a place where there's much GE powered aircrafts, so we've always vested in ways where we could partner as a good supplier with the Minister of Aviation or the company itself.
Back to your vision to the international economy, I think since you're a key player in innovation and new economy: how the company is rebranding and recreating itself, since you as a chairman, moved the company to focus more on industry. What's the philosophy behind it?
I'd say two things, it's my belief today to focus on things that are core and have real depth, and actually industrially we have capabilities that are second to none.
We try to make a company I'd say narrower and deeper, in terms of our core competency, and then just the nature of technology is changing dramatically so if you look back in time, GE products are based on pure science and physics in the future analytics will be as important to everything we do, and so the merger between physics and analytics are taking place in front of our eyes and we want GE to be in the lead of that, so the previous industrial age had software companies and industrial companies separate, the new industrial age says that those two has to be together.
In GE we want to be in the mix, every new gas turbine we sell has hundreds of software and the products takes a substantial amount of date to make the product running. That date could be used to achieve an extraordinary efficiency and fuel performance and emissions reductions and things like that and we want to lead that transformation.
Every big company has a CSR (Corporate Social Responsibility) programme. How does GEpursue such a programme in Egypt?
This is a great question, you see over time we have had a focus on secondary education, youth education and community health and those are the things that has been associated with GE as a pertain for CSR. Those will always be important and we will always be doing things there.
But in my belief the largest CSR initiative in almost everywhere in the world right now is jobs creation, in other words I think what every country in the world suffers from are things like youth unemployment so, what I take seriously with our team is how can we do a good job with developing SMEs, how do we make sure that we're not just succeeding in our supply chain, but helping creating the next generation of companies in every place that we compete.
It's not a classic definition of CSR, but I think it's a more practical definition of CSR. It's something that quite honestly think GE is quite good at, we have a 100 years of history of training and investing in people. That is a very important structure to yourself , again in the markets, there are very specific ways to give back to society, but again what I try to do is make SME development, which would be classically looked at as CSR, we try to make that more part of what we bring when we come to a country.
So what's your message to the world business community after your visit to Egypt?
I think what's most important is that my team here is a great team, and they kind of know what and how really. They have the ideas, they know how to get it done. Typically, my value added is the when, kind of, ticking at the right point of time and so, I think there might be ways to find a place where you bid on, but it's not always completely risk free. So I think if you have a clear idea of Egypt, you have to take risk – and believe that the returns are higher than the risk.
When I look at Egypt today, that is how I feel. It's not that it's easy, but I think you are betting on something that has the potential to have forward momentum. That is my job as CEO of the company, I say, “Ok, let's go now. This is the right place, here is how much risk we take, we think returns will be this much. But it's not going to be easy and it's not going to be simple.” So what you are really trying to do is find the other side, a counterparty that is trying to swing with you as you do this. So that's how I see Egypt – big upside but not easy.
From discussions in the US and in Dubai at Minds + Machines, I understand that each country with a big foothold of GE requires specific goals from extending cooperation. Some companies are focusing on R&D, others on manufacturing. What about Egypt?
In general, I think the pivot is, how does a country like Egypt solve its local need and create jobs at the same time? That is the pivot, and you need good partners to do that. I think that's what the government here is trying to do – which is to say “Let's find a way to invest in infrastructure, but create jobs at the same time.”
The second thing is the incredible youth initiative that exists in Egypt – Egypt still has among the best schools in the region, maybe the world. I have some of the graduates here sitting in front of me! I think what you need, is to unleash the youth movement.
Finally, the hardest thing for the President is that you need to do things now, and you need to do them for the long term. If you look at oil + gas, it's great for Egypt, but it will take years. So you have to think – how quickly can we do efficiency, how quickly can we do wind turbines. So I think you need the right partners, you need to unleash the youth movement and you have to do short & long-term at the same time.
So when a chairman and president meet, what kind of language that encourages foreign investments?
What I liked about President El-Sisi is that he wants to make things happen. I've done this now for a long time in a lot of different places, and I noticed he wants to do it on behalf of the people, and that's not always true in other places. You see the intentions are there, and the will is there. What I like most about him is that he likes to negotiate on the deal. I find that to be awesome!! I love it.
It shows a certain hands-on quality, and what I can do is deliver the company – we have a great team on the ground, the reason why I'm here is to assure the president that I can deliver GE to him here in Egypt. I'm looking for someone who is trying to get something done and is in it for the right reasons. There's always going to be bumps in the road, but if there is a foundation of trust, you can get stuff done. And we deliver. We execute. Once we shake hands, we're good. So we have been in Egypt a long time – we have stayed in tough times – and I think it's such a meaningful, important, critical place in the world. GE wants to be a good partner here.
My last question is on the American presidential elections – how do you see the economic policies of both candidates?
Look, I love my country. I'm a proud American. I want to see US do well. Both candidates are, in terms of global economy, are protectionists. And I don't agree with that. With either one. So, I love my country, but I'd love to see us engaged globally, in an instructive way.
How can such "protectionist approach" affect the American companies abroad?
Look, big multinationals, we can navigate our own way. At the end of the day, we are 5 percent of the world's population, 25 percent of the world's economy – we have a lot more to lose by not being engaged in the world than we have to gain from protectionism. So I think in the end, I think that logic prevails.
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