GE chief pledges to invest more in Saudi manufacturing

GE plans to expand its manufacturing and technology centre on the outskirts of Dammam by 9,000 square metres and create an additional 150 jobs. Courtesy GE

DAMMAM // The GE chief executive Jeffrey Immelt said yesterday that the company would increase investment in Saudi Arabian manufacturing, adding to an earlier pledge to invest up to US$3 billion to meet Saudi government requirements for more local content and employment.

The new investment includes a deal to develop digital management systems for state oil company Saudi Aramco’s giant Jazan complex.

Located in the south-west of the country along the Red Sea, it includes a 400,000 barrels-per-day refinery and the world’s largest industrial gases processing plant.

“We think this is an opportunity for the kingdom to get in a very significant way on some of the new technologies that will be important in the future,” said Mr Immelt, in Dammam, Saudi Arabia’s eastern province oil capital, to announce the deals in the presence of Prince Saud bin Nayef, governor of the province, and other high-ranking Saudi officials.

“Our strategy is all about localisation, providing local jobs and capability development, bringing innovation to the kingdom for local customers but also globally,” he said.

GE and other multinationals with significant Saudi business interests have invested heavily in local manufacturing over the past few years to meet new targets set by the government.

Amin Nasser, the chief executive of Aramco, set out at the end of last year Saudi’s “in kingdom total value added” (iktva) programme that targeted a doubling of local manufacturing content to 70 per cent, as well as an export target for local energy goods and services of 30 per cent, by 2021.

The kingdom this year also set its National Transformation Plan – Vision 2030 – to move the country away from oil, create 5 million private sector jobs, and foster more entrepreneurship, especially in the small and medium-sized enterprise sector, over the next decade-and-a-half.

Companies like GE and its rival Siemens, as well as other big multinationals, have been under pressure to develop locally manufactured content, train and develop local staff and increase export targets.

The centrepiece of GE’s efforts on this front is a manufacturing and technology centre (Gemtec) on the outskirts of Dammam, which the company plans to expand by 9,000 square metres and create an additional 150 jobs.

The delivery of the first “7F” advanced combined cycle turbine to Saudi Electricity Company’s Waad Al Shamal power plant meant Gemtec was now on a par with GE’s two top turbine plants in North Carolina in the US, and Belfort in France, said Steve Bolze, GE’s power division chief.

Overall, GE has committed to double its Saudi workforce to 4,000 by 2020, and to double its local supplier base to 300.

“This GE facility is iktva at its heart,” said Abdulaziz Al Abdulkarim, head of procurement and supply chain management at Aramco. “And they’ve gone further than the targets – Steve [Bolze] said they are targeting 50 to 60 per cent exporting from Gemtec,” which services and refurbishes turbines from utilities in North Africa and other parts of the region.

Yesterday’s deals also included a mandate from Saudi Electricity Company for digitisation of 16 power plants nationwide, as well as a similar deal from the Saudi ministry of health to digitise healthcare provision for its hospitals and clinics.

GE also announced that it has a strategic alliance with Saudi Telecom and a memorandum of understanding with Taqnia, a Saudi government technology investment vehicle, to study areas of collaboration.

The company said it could not put a value on the new deals as the scope of some of the mandates was still open-ended.

Earlier this year, GE signed deals to invest US$1 billion initially with Saudi Arabian Industrial Investments Company (Saiic), including an energy and marine manufacturing facility, with another $2bn potentially invested after next year.

Khalid Al Falih, minister of energy, industry and mines, said the success of these deals will depend on how much they foster growth and diversification.

“The big companies are becoming less and less of the solution if we want to create the 5 million new jobs we need, but they can lead the way through the constellation of organisations they deal with,” he said.

Mr Immelt earlier this year said the first year of the transformation plan would be crucial, and he advised policymakers and the business community to move ahead quickly, especially on digitally-driven business.

“Get your hands dirty. Do small projects that can lead to big projects. But start now. Start small and start now,” he said. “You don’t have to be perfect but you do have to be fast.”

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