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Politics : Rat's Nest - Chronicles of Collapse -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (9568)	9/26/2009 11:35:11 AM
From: Wharf Rat	Read Replies (1) \| Respond to of 24213

GE Energy bulking up in Houston By BRETT CLANTON Copyright 2009 Houston Chronicle Sept. 26, 2009, 12:28AM GE Energy CEO John Krenicki, in a visit to Houston last week, was upbeat in his predictions for local growth. The company has set itself up for expanded business with several acquisitions. If the global energy complex were a giant roulette table, GE Energy would have a chip down on nearly every number. From wind turbines and solar panels to offshore oil and gas equipment and coal and nuclear power plants, the Atlanta-based arm of U.S. industrial and media conglomerate General Electric Co. is in the business. And a growing portion of that business is being done in Houston, GE Energy CEO John Krenicki said during a visit to local company facilities this week. After a string of acquisitions in recent years, including oil field services firm Vetco Gray in February 2007 and pressure control equipment maker Hydril in April 2008, GE Energy now has 3,500 employees in the area, as well as a new office in west Houston. In a roundtable with journalists, Krenicki called his firm's local presence a sign of the region's growing importance to the company and suggested there is likely more to come. Here are some excerpts from that discussion. Q: What brought you to Houston? A: We're a big player in Houston. We have three global businesses headquartered in Houston. These are all high-tech businesses, U.S. headquarters primarily serving export markets. Seventy percent of our business plus is exported out of the U.S. These are manufacturing jobs in the United States that are exporting world-leading technology. We're going to be a bigger and bigger player in Houston over time. I think we've done a poor job communicating how important Houston is to us and what we mean to Houston. Q: Recently, there's been renewed talk of consolidation in the oil and gas services business. Is GE considering growing this business through more acquisitions? A: Our primary growth vehicle will be organic. We have over 11,000 engineers working on new products. Our new product spend is on an order of magnitude of $2 billion a year. So it's probably going to be organic. But inorganic is not totally up to GE. It's up to others as well. We're always looking. But I would say we're not counting on it. Q: You talked about wanting to grow GE's presence in Houston over time. Any thought to bringing the headquarters of your oil and gas business here from Italy? A: It already is the headquarters for the Americas. It's the headquarters for drilling and production. It's the headquarters for gasification. It's big. I think it's important for our employees to know how big we are in Houston. But it's also important for our customers to know we're a good citizen here. We're local. Q: Oil companies pushed oil field services and equipment providers for major price concessions in recent months as the economic crisis forced them to cut budgets. Has that begun to ease? A: This is a highly competitive space. Our answer to that is we're spending more and more on new products and technology so we can bring the customers value. We get them productivity, cost savings, labor savings, more output. But our technology is fundamental to wealth creation, not just for public companies but for national oil companies and countries. If we go to sleep and don't keep advancing technology, then we put ourselves in a bad spot. We've got to stay a step ahead. Q: Can you talk about the outlook for the various businesses GE Energy is in? A: If you look at the macro drivers of our business, economic, or GDP, growth drives electricity. Very strong correlation. If you look at the trends in electrification — electric vehicles, plug-in hybrids, higher standard of living — the demand for electricity is going to double over the next 15 or 20 years. Oil and gas: Even though the economy has been slower in 2009, depletions are still occurring. The world is going to need another five, six, seven Saudi Arabias over the next 20 years. How do you enable that? You need technology. Then clean water. The demand for clean water is going to triple over the next 20 years. Places like Texas have huge water problems. In many cases the customers are similar. A lot of oil and gas customers need power, they need water management. We're meaningful. I think we can be a reliable partner for many of the big oil and gas companies that are headquartered in Houston. Q: What opportunities do you see for GE in the deep-water Gulf of Mexico? A: Right now, most of the equipment we do here is for outside the U.S. But if you look at what's happening in Brazil, and there were some recent announcements in the Gulf, I just think as a matter of energy security this is a business that we like. We're very happy with the Hydril and Vetco Gray acquisitions. We think they're in the right spots. So we're betting on deep water. Everything is hard in energy. Things will be more efficient in the future, lower-cost. But the trend is up. Everybody in China wants a car. That's success. So we're very bullish about the oil and gas space. chron.com