GE's Na­bil Habayeb on how the com­pany will help drive the re­gion for­ward

With GE’s global per­for­mance go­ing through a chal­leng­ing pe­riod, the com­pany’s pres­i­dent and CEO of the Mid­dle East, North Africa and Turkey – Na­bil Habayeb – ex­plains how the re­gional arm of the con­glom­er­ate is buck­ing the trend

Gulf Business - - STYLE AND SUBSTANCE: - By Neil King

IN THE DAYS LEAD­ING UP to my meet­ing with Gen­eral Elec­tric’s pres­i­dent and CEO of the Mid­dle East, North Africa and Turkey, Na­bil Habayeb, head­lines in the global busi­ness press were less than pos­i­tive for the 126-year-old multi­na­tional con­glom­er­ate.

Shares tum­bled to a nine-year low to­wards the end of Septem­ber – drop­ping to $11.60 in their worst show­ing since July 2009 – though they re­cov­ered to around $12.17 at the time of go­ing to press.

Ear­lier this year in June, the com­pany was re­moved from the Dow Jones in­dus­trial av­er­age, end­ing a pres­ence of more than 100-years, when it was re­placed by drug­store chain Wal­greens Boots Al­liance. The re­moval came against the back­drop of a steady de­cline in mar­ket cap from $594bn back in 2000, down to $98bn last month, with Oc­to­ber also see­ing the in­stal­ment of a new CEO, H. Lawrence Culp Jr – oust­ing pre­vi­ous CEO John Flannery who lasted less than a year in the role.

Hardly good news to go into an in­ter­view with, but when I dis­cuss the com­pany’s cur­rent sit­u­a­tion with Habayeb, he flashes a wry smile be­fore of­fer­ing a much more mea­sured un­der­stand­ing of events than por­trayed by the me­dia.

“I’ve been with the com­pany 36 years and have seen all the cy­cles it goes through,” he says.

“Dur­ing the fi­nan­cial cri­sis, the stock price went down to lit­tle sin­gle dig­its – we’re still way above that and the com­pany re­cov­ered. So while things may be chal­leng­ing, the com­pany is po­si­tion­ing it­self for what is really needed in the fu­ture.” He adds that the MENAT re­gion he over­sees is es­pe­cially pre­pared for the com­ing years, with the con­glom­er­ate on the verge of a ma­jor re­struc­tur­ing on a global level as its var­i­ous di­vi­sions pre­pare to be split into in­de­pen­dent com­pa­nies – one of the sum­mer’s ma­jor busi­ness sto­ries when it was re­vealed in a June an­nounce­ment. “Some­body sent me a copy of the Time mag­a­zine front page from the late 80s, show­ing the col­lapse of Ap­ple,” con­tin­ues Habayeb. “Ap­ple re­struc­tured and moved on to be the first tril­lion- dol­lar com­pany. So yes, there are a lot of neg­a­tive things go­ing on now, but I’m con­fi­dent for the fu­ture; par­tic­u­larly in our re­gion.

“The com­pany is go­ing to trans­form into a power com­pany, into a re­new­able com­pany, into an avi­a­tion com­pany. And if you take a look at those busi­nesses, there is a lot of syn­ergy from a tech­nol­ogy point of view, from an in­stalled-base point of view, from an R&D point of view and ca­pa­bil­ity. Our health­care busi­ness con­tin­ues to be very im­por­tant, and so is our oil and gas busi­ness.

“We de­cided that our busi­nesses are strong and are good, and we’re hav­ing them be in­de­pen­dent com­pa­nies to lever­age their abil­ity to grow even fur­ther through part­ner­ships and through IPOs, sim­i­lar to what we have done in the past.

“So we will con­tinue to be in these in­dus­tries in a dif­fer­ent struc­ture or ar­range­ment with sep­a­rate traded com­pa­nies, which I think will ben­e­fit a lot of peo­ple. And the core of the com­pany will con­tinue to be what brings the syn­er­gies.”

With so much ex­pe­ri­ence across the GCC, wider Mid­dle East, North Africa, Turkey and Pak­istan, Habayeb is well placed to un­der­stand what the re­gion needs and how to de­liver it – not least due to his re­la­tion­ships with gov­ern­ments over the years that have helped him dis­til some uni­ver­sal needs.

“Over the years, I have sat with lead­ers from across the re­gion – the Mid­dle East, North Africa, Gulf, oil pro­duc­ing com­pa­nies, non-oil pro­duc­ing com­pa­nies – and re­gard­less of who you sit with, all of these peo­ple have com­mon themes,” he ex­plains.

"One, they all want to fo­cus on the ef­fi­ciency of the gov­ern­ment. How fast is the gov­ern­ment able to re­spond to the peo­ple’s needs: To pro­vide re­li­able avail­able power to ev­ery­body; to pro­vide clean water to ev­ery­body; af­ford­able, qual­ity health­care to ev­ery­body; good in­fra­struc­ture. “Num­ber two, they are all wor­ried about se­cu­rity. Not border se­cu­rity – I’ll come to that – I’m talk­ing about en­ergy se­cu­rity, food se­cu­rity and water se­cu­rity. That’s why peo­ple are look­ing at re­new­ables.

“The third thing is, how do you create jobs for the 60 per cent of peo­ple that are less than 25 years old? How do you make sure they have the skillsets to fill these jobs? Which means how do you have an ed­u­ca­tion sys­tem that sup­ports get­ting these skillsets?

“Then the fourth thing, which is very much tied to the first three, is

“Now, the big thing there is the fo­cus on re­new­able en­ergy. When you see the an­nounce­ment on NEOM ( Saudi), it’ s great. That helps our re­new­able en­ergy busi­ness that is now ex­pand­ing over there”

NA­BIL HABAYEB PRES­I­DENT AND CEO OF GEN­ERAL ELEC­TRIC MENAT

na­tional se­cu­rity – border se­cu­rity and cy­ber se­cu­rity.

“When you look at the first three – be­cause I don’t play a part in the fourth one – the first three are what GE is about. There is still a need for health­care, still a need for di­ver­si­fi­ca­tion and tourism, which avi­a­tion plays a big part in. There is still a big need for re­new­able en­ergy. That’s what we are and that’s what we’re go­ing to con­tinue do­ing, re­gard­less of what the com­pany is go­ing through.”

The pres­i­dent and CEO’s pos­i­tive sen­ti­ments for the re­gion are backed up by ac­tion, he adds, with part­ner­ships, pro­grammes and ini­tia­tives all thriv­ing well as an im­pres­sive growth tra­jec­tory and com­mit­ment to lo­cal tal­ent.

“We have our lead­er­ship train­ing pro­grammes in part­ner­ship with Mubadala in the UAE, we have our lead­er­ship and skill train­ing in Saudi Ara­bia and Al­ge­ria. And think about the lo­cal team we have built: We have gone from about 750 peo­ple when I took this job in 2004 to now be­ing 18,000. And 95 per cent are peo­ple from the re­gion. The se­nior lead­er­ship are all peo­ple from the re­gion, and more than 60 per cent of my lead­er­ship team are re­gional women.

“So this re­gion is strong and the com­pany is strong on the things that this re­gion re­quires.”

GE has had a pres­ence in the re­gion for more than 80 years, pro­vid­ing a raft of ser­vices and so­lu­tions cov­er­ing en­ergy, health­care, trans­porta­tion, avi­a­tion, power gen­er­a­tion, digi­ti­sa­tion, sus­tain­abil­ity and more.

Among its most re­cent moves, the com­pany an­nounced it will sup­ply four nu­clear tur­bine is­lands for Egypt’s first nu­clear plant, was awarded the first largescope in­te­grated ser­vice con­tract for Saudi Aramco’s Mar­jan oil­field through GE com­pany Baker Hughes (BHGE), and signed an agree­ment with Saudi Ce­ment to in­crease power out­put and ef­fi­ciency. The com­pany also an­nounced the sign­ing of Prin­ci­ples of Co­op­er­a­tion with the Iraqi gov­ern­ment, aim­ing to add up to 14GW of power and create up to 65,000 jobs in the coun­try.

Part­ner­ship with eastern mar­kets re­mains cru­cial to GE, with the com­pany work­ing to­gether with Chi­nese EPC com­pa­nies for more than 20 years and its re­gional con­fer­ence, China for the World: En­ergy In­fra­struc­ture Co­op­er­a­tion Fo­rum, co-hosted with Caixin Me­dia, sched­uled to take place in Novem­ber.

It’s a snap­shot of the wide­spread and large-scale work GE does across a num­ber of in­dus­tries and ge­ogra­phies, both in the pri­vate and pub­lic sec­tor. Many of the achieve­ments GE has en­joyed to date, and much that re­gional strength Habayeb high­lights, have been re­alised thanks to the healthy re­la­tion­ships the com­pany has fos­tered over the years. And these re­la­tion­ships are re­garded by the pres­i­dent as cen­tral to the past, present and fu­ture of GE’s en­deav­ours.

“This re­gion is all about re­la­tion­ships. Once you de­velop the re­la­tion­ships and the trust, peo­ple work closely to­gether to help each other,” he says.

“We have shown to the re­gion that we are a lo­cal com­pany in many of the coun­tries that we have, and when you start to fo­cus on the pri­or­i­ties that I talked about ear­lier, you be­come part of the fab­ric. You start help­ing each other.

“The mar­ket has a lot of chal­lenges, such as fi­nanc­ing, which is a big is­sue. But with our global net­work and our re­la­tion­ship with the cap­i­tal mar­ket, expo credit agen­cies, and so on, we are able to help bring so­lu­tions.

“We’ve de­vel­oped strong part­ner­ships, and part­ner­ships work to­gether to ad­dress chal­lenges that each part­ner may have in a mar­ket to move for­ward. And that’s what we’ve been able to do.”

Forg­ing these part­ner­ships and re­la­tion­ships hasn’t al­ways been straight­for­ward, with dif­fer­ent coun­tries hav­ing been at dif­fer­ent stages of de­vel­op­ment, un­der­stand­ing and need. But Habayeb says he has seen an evo­lu­tion on this front – cer­tainly within par­tic­u­lar coun­tries.

“We have seen tremen­dous change,” he says. “When you think about Saudi Ara­bia with Vi­sion 2030, the ac­count­abil­ity that the king­dom’s lead­er­ship has across the board, and the trans­for­ma­tion that’s be­ing made in the trans­ac­tions and in­ter­con­nec­tions of ev­ery­body, it’s a big change.

“It used to be very dif­fi­cult to con­nect the dots and move things ahead. Now you go there and ev­ery­body is singing to the same tune; ev­ery­body is aligned and in­ter­con­nected. Things move a lot faster and peo­ple are held ac­count­able for get­ting things done.

“I use Saudi Ara­bia as an ex­am­ple, but you can say the same thing about the UAE, the same thing about Egypt, about a lot of coun­tries across the re­gion. There used to be a lot of try­ing to pull peo­ple into things, now it’s more aligned and a lot eas­ier.”

Saudi Ara­bia pro­vides an in­ter­est­ing case study in what GE can pro­vide to­day, with Vi­sion 2030 com­mit­ting to fast and long-last­ing change in the king­dom. Pro­jects such as the $500bn Neom mega-city and the Red Sea Re­sort will pose Saudi Ara­bia with tech, power,

en­ergy and other chal­lenges that need to be ad­dressed, while GE’s launch of a 2.75MW wind tur­bine for Saudi Aramco at the Tu­raif Bulk Plant will help the king­dom reach its goal of in­stalling 9.5GW of re­new­able en­ergy ca­pac­ity by 2030.

“Saudi Ara­bia is a big mar­ket, for sure,” says Habayeb.

“The needs there are huge, and lot of the pri­or­i­ties that are em­bed­ded in Vi­sion 2030 are aligned to what GE can of­fer.

“We have in­vested a lot in lo­cal man­u­fac­tur­ing and ser­vice ca­pa­bil­ity, in skillsets, cre­at­ing jobs of Saudi women, de­vel­op­ing lo­cal lead­er­ship. Ev­ery­body in our lead­er­ship team there is from Saudi, and over 70 per cent of our peo­ple – more than 2,000 – are Saudis.

“Now, the big thing there is the fo­cus on re­new­able en­ergy. When you see the an­nounce­ment on NEOM, it’s great. That helps our re­new­able en­ergy busi­ness, which is now ex­pand­ing over there.

“And also the fo­cus on driv­ing ef­fi­ciency on digi­ti­sa­tion. Our health­care team is do­ing an amaz­ing job with the Min­istry of Health, for in­stance, in im­prov­ing the ef­fi­ciency of the health­care sys­tem us­ing our dig­i­tal plat­form.”

Not just in Saudi Ara­bia, re­new­ables has been a much talked about sec­tor across the GCC, wider Mid­dle East, and be­yond. The UAE ap­proved the world’s two largest so­lar pro­jects last year – the Mo­hammed bin Rashid Al Mak­toum So­lar Park in Dubai, and the Ad­wea Swei­han plant in Abu Dhabi – while the In­ter­na­tional Re­new­able En­ergy Agency said Saudi Ara­bia is ex­pected to lead re­new­able en­ergy de­vel­op­ments this year with up to $7bn worth of new ten­ders.

A re­port pub­lished by con­sul­tancy Strat­egy& ear­lier this year said in­vest­ments in re­new­ables in the re­gion could reach $16bn in 2020. With a cu­mu­la­tive to­tal of $40bn in­vested be­tween 2016 and 2020.

But for Habayeb, re­new­ables have long been an im­por­tant is­sue and have only come to light re­cently due to in­creased mar­ket at­ten­tion.

“The rea­son peo­ple are talk­ing more about re­new­ables is that the mar­ket is talk­ing more about re­new­ables,” he says.

“I re­mem­ber 10 years ago when I sat with sev­eral min­is­ters of en­ergy whose economies were based on hy­dro­car­bons, a meet­ing about re­new­able en­ergy would end in a nanosec­ond. Now it’s those min­istries that are really driv­ing re­new­able en­ergy.

“Tech­nol­ogy in re­new­able en­ergy has really, really im­proved to be com­pet­i­tive, which is great. And it’s the right thing for the re­gion to do, be­cause we’ve got the wealth, whether it’s so­lar ca­pa­bil­ity or wind. It’s in Oman, Bahrain, Saudi Ara­bia, UAE, Jor­dan, Egypt, Tu­nisia. Morocco has been lead­ing quite a bit; Al­ge­ria is talk­ing about it.

“Take a look at some of the pri­vate eq­uity and some of the de­vel­op­ers in the re­gion: They are all in­ter­ested. This is why you see more talk about it now.” Habayeb cites UAE-based Mas­dar as one of the key driv­ers for re­new­able growth in the re­gion, en­cour­ag­ing other parts of the Mid­dle East to move their plans for­ward with con­fi­dence.

And it’s that theme of con­fi­dence that ap­pears cen­tral to the pres­i­dent’s out­look – along with an un­wa­ver­ing com­mit­ment to GE’s long-stand­ing essence.

“Our plan is to really stay fo­cused on trans­lat­ing what the mar­ket and the re­gion needs and pri­or­i­ties are, to what the com­pany means,” he says.

“We be­lieve that the core of the com­pany con­tin­ues to be a great match for what the re­gion needs, and it’s all about re­la­tion­ships, it’s all about part­ner­ships, it’s all about bring­ing value- add in our dif­fer­ent so­lu­tions.

“This re­gion con­tin­ues to be ex­tremely im­por­tant for the com­pany, and the lead­er­ship has iden­ti­fied that and been ex­tremely sup­port­ive of what needs to be done.”

With that back­ing, and that com­mit­ment, you can be sure GE will con­tinue to play an in­flu­en­tial role in the re­gion – no mat­ter what the global head­lines may say.

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