Roland Teixeira – Country Executive, GE – Benelux
Roland Teixeira of GE shares how the company is promoting optimization to lock in value in an advanced market like Benelux. He elaborates on GE’s efforts to foster projects in smart energy and bring analytics to big data to produce predictive and even prescriptive solutions in the future.
You’ve been in charge of the Benelux region since 2011. Let’s start by talking about how GE works in the region – what are your strengths and areas of focus in the region today?
There are three large components. The first area is mobility solutions—aircraft engines solutions, solutions for metros, solutions for transport. If you fly KLM you are most likely flying with a GE engine, for example. The second area is energy where you have the full spectrum of energy that we serve from heavy duty all the way over to renewables. The third big component is health, from diagnostic and big machines to life sciences. Capital is also an important part of what GE does in Benelux; however, it has lost some of its size due to a clear strategy to bring it back to 25 percent contribution and to serve the other three components in which GE operates. It has to be there to serve our customers, to serve our own ability to sell technology, to bring it to customs, to make it competitive and to be that little value added to the company. So the three main components we serve here at GE really are energy, mobility, and healthcare.
Within the energy segment you have the oil & gas segment—five percent upstream and 95 percent downstream. On the 1st of January, 2014, GE created an actual downstream technology services group, which effectively placed the knowledge that we have inside the oil and gas group at large to serve the downstream industry. We have a large energy base here in this region; we’ve worked with every single utility firm that you find in the area, and we’ve been very successful in the agricultural sector as well. Furthermore, we have a limited yet ambitious presence for the GE wind sector, as well as growing our renewables portfolio.
In 2012, we became aware of the need to upgrade and render the downstream industry more efficient. To give you a bit of history about the region, most of these refineries are 50-60 years old, which means that some of them have fairly outdated technology and need heavy investment. We are lucky in this region in that we are port-bound. This means that from a downstream perspective we have a price advantage and a logistical chain advantage. This is one of the focus areas that even the government took into account.
What is the impact of port authorities on the refineries present in the Netherlands? Is there an overarching barrier to changing legislation or do you think that it’s really that volatile?
I think that the volatility is really around things like taxation and environmental policies. Regarding your question, the port of Rotterdam has a big impact. They are not the owners of the land, but rather they are the managers of the land. Of course, they are very influential managers of the land and seen competitively from a vision perspective and tenant mix perspective, they really are ahead of the curve. They understand very clearly that petrochemical exists, which is extremely important for us. The industry would like to see the downstream flourish in this part of the world. We have an industry that is mature and well served, and we now need to take a look at what our vision is and what we want to achieve in this industry for the future.
Having talked a little bit about 2012, and the situation you found the refineries in at that time, how would you say the situation has advanced in the last three years?
It has advanced tremendously! The industry has managed to convince headquarters of the importance of investing here. The name of the game is efficiency. In the recent past, there was one refinery, the Kuwait refinery, here that was looking at expansion. They realized that it was more cost effective to develop their own refinery in Kuwait than to invest additional funding into a new process here—hydraulic fracking—so they have now put their project on hold. Furthermore, they have put their refinery on the market and are looking for a buyer. From the GE perspective, we have installed a base in the refinery, which means we have compressors and technology in the refinery, so of course we would have loved for them to have expanded. Changing perspectives, from my position on the board of employee federation, it is a pity that a company like Kuwait Petroleum who has their headquarters for Europe here in the Hague has not been able to show the value of this additional investment in the region. But despite this example, which is a bit of a miss for the area, there have been substantial amounts of investment and success here.
One of the other important things that companies are looking to invest in is flexibility, particularly in the downstream area. Is this an area where GE has technology or expertise that can help in terms of being able to shift the type of final products that are being put together in the refineries?
Our product range is about compression; it is about non-destructive testing and cooling systems. To answer the question, our total solution today is limited. We still have gaps in the portfolio of our total refinery. We also need partners, though we do partner with the EPCs in the industry and we partner with other manufacturers in order to be able to serve the whole chain in a refinery—there is simply technology that we still do not deliver.
Having said this, referring to flexibility more specifically, I would almost put flexibility in the same concept as efficiency. There are two ways of looking at it. First, we’re constantly investing in our factories to improve the performance of the machines and aiming for that extra percentage of performance and efficiency. Secondly, the vision of the company that is called the Industrial Internet is very important for us in this region. The Industrial Internet is the application of software to create knowledge out of machines. It ranges from a machine giving you its temperature all the way to vibrations and other segments in the machine so that you have a good view of the performance of the machine. The first stage of the Industrial Internet is about big data. The second stage, which we are working on now, is for the machine to give us relevant data and to be able to analyze that data. In this stage you apply human knowledge and expertise. The next stage is heading toward predictive activity, whereby the machine gives us instructions on what it needs. Lastly, we would like to see prescriptive activities, which means that the machines sends its own message to the manufacturing site about its needs and activities. This is the future for GE.
Industrial Internet is relevant because we are living in a mature economy that has everything that we need. The only way to maintain an added value is therefore by improving upon what we already have; it’s by getting more out of the technology that we have installed over the years. For example, the design of the refinery today is not optimal due to external pressure, but it is all there. So the question is can we go the next step, and can we go in partnership and now use the co-generation unit for other purposes external to that production market, which is the refinery? So, you start with big data, you move onto analytics, and then you are able to do something about it. We must create the software innovation arability for this major area. Software is going to be the ability to get these machines to share information that is relevant to humans and relevant to other machines. That is the focus for this part of the world. We are living in a mature economy so using the Industrial Internet is really the only way we are going to be building the future.
These industries of water, energy, fuel, and health seem very diverse, and yet GE is a company that straddles all of them. What are these industries missing to tie them together and help them move forward together?
We are creating the ability to bring that piece of the puzzle that we could then use in another part of the industry. For example, you take two different businesses, which were bought at two different times, and put them in a stall where they share the same piece of information. The idea that every single component of one division is going to be useful to another division simply will not work; however, there are segments that are useful for both parties. My goal is for this region to have a distraction-free growth. In other words, really only focusing on what adds value to the business.
Where do you see GE in the next three to five years, and what are your aspirations for the future of the company?
We have to be the best in the optimization game; it really is about that one or two percent extra optimization. When you think GE, you think optimization. We’ve been able to solve many issues, get more out of our machines, and we’ve been able to connect the machines to knowledge and to brains. We still have an enormous amount of development to do in the areas of predictive and prescriptive, as we were discussing before. This is really where the company has to aim for in the future to stay relevant and to stay on top.