Lighting up the Gulf

Infrastructure and commercial services behemoth General Electric is playing a crucial role in building the new Middle East. Alexandra Dubsky reports.

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By  Alexandra Dubsky Published  November 26, 2006

|~|60011_300-200.jpg|~|Proof: GE provided the stunning light display for the Borobudur Temple in Indonesia (left), and the company is heavily involved in Dubai’s property development projects, valued at US$140bn (below). |~|Infrastructure and commercial services behemoth General Electric is playing a crucial role in building the new Middle East. Alexandra Dubsky reports. When Nabil Habayeb, President and CEO of the General Electric Company (GE) Middle East and Africa, is asked if he wants to become the next Mohammed Alabbar, he smiles. “He is already a great customer of mine.” Habayeb’s answer effectively emphasises GE’s firm foothold in the region. There are hardly any infrastructure, real estate or industrial projects in the Gulf that the firm is not involved with. Fortunately for Habayeb and GE, most GCC nations today are reinvesting tremendous amounts of petrodollars into various economic sectors and rely heavily on a dependable technical supplier for their numerous ventures. Connecticut-based GE, the second biggest company worldwide in terms of market value worth US$371bn, runs a diverse portfolio including infrastructure components such as energy, water, aviation, railway, industrial appliances, lighting products, and industrial equipment as well as healthcare and commercial services, offering more or less everything big-spending emerging markets might need - and Habayeb is determined to fulfill these needs. Habayeb, a Lebanese mechanical engineering graduate, has been with the company for 25 years - and is a dedicated GE employee. “This is the only company that ever interviewed me and the only one I ever worked for,” he tells Arabian Business. After holding several managerial positions in the US, Europe and the MENA his task now is to “develop and expand the growth of GE’s different businesses across the region.” And GE will need to rely on Habayeb to do his job - the firm aims to get about half of its revenues from outside the US this year, up from 40% in 2002 due to investors’ fears that US economic growth may slow down. Sales from the region are also expected to rise to US$3.4bn by the end of 2006, more than triple the US$1bn in sales in 2002. GE’s growth rates in the Middle East have meanwhile reached a staggering 20% per year as opposed to only 2% annually in most developed markets. “We obviously focus on emerging markets, and although the Asian and Eastern European areas are also important we have the most business now coming from this region,” Habayeb says. “Everybody talks about China now. I like to think that the Middle East is already bigger than China, and it is growing faster,” he adds. GE began a more concerted effort about four years ago to tap sales in the region by bundling contracts, Habayeb says: “You cannot be the company that comes in for a one or two year gig, finish, pick up and leave. If you want to sustain growth in these emerging markets you have got to be showing and sincerely committing to a durable cooperation.” The company has been operating in the MENA since the 1930s. “We have a strong base here, we sold our first machine in the Gulf in the early 1930s. Thanks to our localization program most of our employees are from the region, so we are not necessarily viewed as a typical US company,” Habayeb reveals. Habayeb summarizes the firm’s Middle East strategy. “First we segment uncovered markets. There are markets with ‘real time growth today’, such as Saudi Arabia, others with ‘prime time growth tomorrow’ such as Qatar, Abu Dhabi and Dubai, and then others with ‘in time growth in the future’ such as Iraq. Although they have similar needs we cater for them differently. We focus on key industries; we have to translate the drivers of the specific economic growth to the GE portfolio. Also, we build on the existing base, enlarge infrastructure and industrial projects. At the last stage we need to find new opportunities,” he says. Habayeb says that GE tries to identify the specific needs of a location and then offers products and services that apply for the whole region. “We invest in technologies, and human resources and try to improve localization to foster our position. For example, we train people that come out of Iraq on healthcare facilities in Jordan so we do something in one place but the whole region will benefit from it.” He continues, ”You cannot do the same initiative at every single place, and you cannot do all in one place. So you need to pick and choose what is important for this place, what differentiates this location from another, what can be done there that will serve the whole region. For example we are building training centres that have a technical focus, so we train regional engineers that work within the industry as a whole.” Although the firm runs initiatives all over the Middle East the largest chunk of work comes naturally from the Gulf. In Qatar the company will spend US$100bn in the next five years on roads, power plants, healthcare facilities, airlines, water treatment, oil and gas production and transportation and railroads. The firm aims to build a “country to company” relationship with Qatar’s Emir Sheikh Hamad Bin Khalifa Al Thani and Qatar’s minister of energy and industry Abdulla Bin Hamad Al Attiyah and the first deputy prime minister and minister of foreign affairs Sheikh Hamad Bin Jassim Bin Jabr Al Thani as their main business partners. “Our priorities in Qatar are to establish an industry partnership through our aviation unit, run several infrastructure and industrial investments, and offer an innovative drive through service centres, advanced technology and leadership programmes,” Habayeb says. GE is also setting up a Technology and Learning Centre at the Qatar Science and Technology Park that will be the base for four GE businesses – aviation, energy, oil and gas, and water, which is scheduled to open in 2007. In Saudi Arabia, planned spending for similar infrastructure projects will require a US$624bn investment by 2020. In the Kingdom GE is also adopting a “customer to company” approach, with Sabic, King Abdullah Economic City, Saudi Aramco, the national water and electricity provider Marafiq and the Saudi Arabian Minerals Company as their main clients. “In Saudi Arabia we will address mainly infrastructure projects, besides expanding into new sectors such as railway and healthcare. We are involved in the construction of a 1000km rail link between Riyadh and Jeddah, a construction of a 115km new line between Dammam and Jubail and an upgrade of the 950km rail line between Riyadh and Dammam. Overall the Saudi rail organisation will spend a total of US$2bn,” he says. “In the healthcare sector the Ministry of Health has a budget of US$2.5bn in 2006-2007, remaining from its original 2002 five-year plan. Some large projects such as 2500 primary clinics and 85 new hospitals of 300 beds each are planned within the next five years.” Saudi Aramco will spend US$70bn in seven GE businesses within the next five years, and it is forseen that the Saudi construction market will add another US$112bn worth of investment to the company. It is estimated that Emaar’s King Abdullah will spend US$27bn over the next 12 years and has already placed the first order with GE Water. Investments will be in the key areas of energy, water, security, railway and aviation. “In Saudi Arabia and Qatar we focus on the key sectors and projects, and in the training and the development of local talents which is a major component of our company’s vision. Qatar needs improvement in its infrastructure, healthcare and education, whereas Saudi Arabia needs to reduce its dependence on oil and support of its rapid population growth,” he adds. In the UAE GE targets efforts for economic diversification, mainly in the industrial and financial sector. “The Emirates needs enhanced infrastructure, healthcare, water and education facilities. The UAE therefore plans to invest US$440bn on infrastructure, real estate and tourism projects,” Habayeb states. GE’s local partners include Emaar, Adnoc, Emirates and Dubai World, among others. But the real big spenders are naturally Dubai’s gigantic real estate projects. Dubai’s top property developments hold total planned investments of US$140bn - the Dubai World Centre leads with US$33bn, followed by Dubai’s longest hotel strip Bawady with US$27bn and the Dubai Palms with US$18bn. Dubai Water Front and the Stars Islands in Sharjah plan to invest US$3.5bn and US$5bn respectively, and the Abu Dhabi Al Raha beach development and the Shams in Reem Island are expected to spend US$14bn and US$6.8bn correspondingly. This month GE closed a deal with the Abu Dhabi government to train and develop leadership as part of their regional initiative, and earlier this year the firm and the UAE government launched an initiative for resource conservation and alterative energy, with the government assigning land to build a campus with a start up investment of US$100m. The firm also signed up with Dubai Holding to invest in high-tech infrastructure and industrial projects across the MENA region, but Habayeb refuses to be drawn on further details. “This region is obviously very important for us, since the wealth here is beyond belief. It is therefore imperative for us to provide solutions that create long-term partnerships,” he says. Last week GE invited some US investors to the Gulf to get an idea of the company’s operations in the region. “GE was the first firm to ever invite investors to tour the Middle East," Habayeb says. “We had 35 investors who joined us to visit our sites in Qatar, Abu Dhabi and Dubai. We told them about ourselves and what we are doing here, and made them see for themselves that this economic growth is going to continue regardless of future oil prices. Only three of them had been to the Middle East before and they all were clearly impressed.” “In Qatar they saw our efforts for enhancing a country-to-company relationship, in Abu Dhabi they got familiar with the needs of an oil rich economy that wants to diversify, and in Dubai they saw the needs of a thriving economy with virtually no oil,” he adds. “Besides the Middle East many African nations are also important for GE and have phenomenal growth prospects,” according to Habayeb. “Nigeria for example is a key importer of many our industrial units, which used to be mainly manufactured for the US,” he says. Habayeb talks with a soft and mellow voice but his future ambitions are tough and aggressive. “We see the amount of our employees doubling by 2010. We will also continue to make money in the region - and not just from the region. Social responsibility is a must for us. We will foster our long-term partnerships for many years to come, and we will aim to be the preferred technical supplier and partner in the region. GE is also hiring more local employees as it expands. Long-term contracts are the key," he says. As Middle Eastern economies are set to grow heavily for years to come, it looks as if Habayeb is likely to remain busier than ever.||**||

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