ge local supply chain development

Imagination at work.

An African Success Story

February 21st, 2014

GE Local Supply Chain Development

2 GE Africa

2/20/2014

GE Confidential: Privileged & Confidential: Do not Copy or Distribute

GE opens 1st

foreign office

in

South Africa

Closes SA office

Apartheid

SA office

reopened

New Focus on Africa

•$20M Africa donation

•Signature of NEPAD

covenant

•GE plants Flag on

Kilimanjaro

•IB on transportation

•O&G office in Angola

•New Corp office in Nairobi

•Hamma project

•Voted 1st infrastructure

company in Africa

•GE day in Angola

•Nigeria energy win

•Opened 4 new entities

•1st Africa CEO

program

•CNBC Africa launched

•Chairman’s Growth Hero

award - NX Africa

1898 2003 2004 2005 2006 2007 2008 1995 2002 1985

Africa: a long history … since 2000 reinvigorated

2009

•BEE Deal in South

Africa

•C2C signed with

Nigeria

• Ghana Affordable

Modernization

Initiative

2012

GE Africa HQ

established

3 GE Africa

2/20/2014


GE’s footprint Healthcare Transportation Aviation Oil & Gas

• DI centers & hospital

development

• Healthymagination as a

strategy

• Transnet assembly

partnership … 143 locos

• Aging fleet (25 yrs+) …

refurb opportunity

• ~200 engines in service

… pipeline ~$0.6B

• Fleet renewal & growth …

GECAS leasing

opportunity

• Discoveries in east Africa

• Support for IOCs & NOCs

Nigeria Angola Ghana

+ Mozambique + Tanzania + Uganda

well established

next • 25-hospital development

programs (Nigeria,

Ghana, South Africa)

• Significant opportunities

… ~$3B refurb, ~$4B

mining & urbanization

• Oil production to double to 9.5Mbbl/d by ‘20

• Adding ~50 a.c per year …

120 engines secured

• 113 HDGT installed base

CFM is a 50/50 Joint Venture between GE & Snecma Engine Alliance is a 50/50 joint venture between GE & Pratt & Whitney

Power

• Nigeria 10GW MOU,

Ghana 1000 power

initiative

• 70% Nigeria install

base GE

• 3GW project

development pipeline

4 GE Africa

2/20/2014


Sub-Saharan Africa overview

• $90B+/yr infra spend needed to be developed

• Middle class to increase to 528MM by 2030

• 70% of population without electricity

• 10% in MW capacity needed annually

• Air traffic to grow 6.5%/year through 2020

Footprint

Macroeconomics GE footprint

’12E GDP: $1.8T/5.2%

Population: 821MM

Infra spend: ~$45B

# of sites: 22

Employees: ~1,500

First entered: 1898

Nigeria

’12E GDP: $0.4T, 7.0%

Total pop: 163MM

’12E GDP: $0.1T, 7.5%

Total pop: 20MM

Angola

South Africa

’12E GDP: $0.5T, 3.0%

Total pop: 50MM

Source: Oxford Economics

10% CAGR

$1.0B

$1.8B

Industrial revenue*

* Excluding NBCU, including GE/GECS elim

GE Africa investment

6 GE Africa

2/20/2014

6 GE Africa

2/20/2014

Strategic investment initiatives Angola Subsea JV Project Emerald –

OneGE Nigeria

Partnering in Angola to enable GE’s growth

• Operationalizing under way … basic infrastructure in place

Investment … $250M

Rail Transportation Partnership bid … GE Supplier Development Vehicle

OneGE Angola

Localization in Nigeria to enable growth

• Two supplier fairs held in Nigeria … support development

• Facility design and early work construction n progress

• Multi-modality model definition to be socialized w/ P&Ls

Investment … $1B over 7 years

29k jobs created / sustained, partner with gov’t for manufacturing COE


Distributed Power facility to serve as OneGE foundation

• Energy Management added to align w/Genset sales


Multi-modal capability

7 GE Africa

2/20/2014


Challenges faced on the continent

Technical expertise Management Access to finance

• Industrial industries still maturing, current facility gaps

• Lack of engineering skillsets to operate facility investments

The challenges of African countries are similar to the other growth markets in which GE

operates. GE are thought leaders in initiatives to overcome these challenges.

• Suppliers operate in a silo environment without global reach

• Inexperience in running & managing world class facilities

• Infrastructure & products are capital intensive & long cycle

• Financing institutions unable to raise affordable funding

Technical requirements

9 GE Africa

2/20/2014


Supplier development & localization approach

Supplier Identification

Baseline Capability Assessment

Supplier Selection & Development

Co

mm

od

ity

lo

cali

zati

on

st

rate

gy

Assembly BOM

Buy

GE Make

Buy

Make

GE Supplier to localize

Supplier to Localize

Local supplier

GE local site

Sub-Assemblies

Maintain source

Supplier Contact Responsibility Product

Operating

countries

Existing

partnership in

SSA region

Interest level

in direct

localization

Interest level in

partnership in the

region

SiemensElectric motors, electric drives,

transformer

over 160

countries

Has entity in Nigeria:

Siemens Nigeria LtdN/A N/A

Hydrasun

Vic Margiotta Business dev mgr

Engineering services for GE and Oil

companies

UK, Ghana,

Angola

Hydrasun Angola

partnership

5 5

G.I.&E Marco Sargenti General Manager

Hot parts, reciprocating

compressors, packaging of

reciprocating compressors, sythetic

libe oil consoles, dry gas seal

panels, turbo expanders, pump and

Italy, Taiwan,

China, MexicoNone 4 4

OMA Officina Mauro Angelucci General ManagerSteel structures, off & onshore

modules, piping, pressure vessels,

Italy, Romania,

and WIP for

Bulgaria,

Estonia, Canada,

None 4 4

Woodward Martijn Van Der Meer Business dev mgr

GT controls systems, valves (electric

& hydraulics); drivers, fuel nozzles

& catridges, electronic components

US, Germany,

Poland and

China

Nigeria (Aftermarket

partnership);

worlwide

4 5

Advance Technology

Valve

Riccardo Rebuffi HR & Legal Counsel Valves gate, ball and check Italy None

3 3

Albizzaiti Roberto CastelnuovoExhauxt Pipe, High Metalic Parts,

Noise Reduction EquipmentItaly None 3 3

Alexsistemi Roberto CastelnuovoExhauxt Pipe, High Metalic Parts,

Noise Reduction EquipmentItaly None 3 3

Allimep

Ivan Oelli CEO

Fabrication of (offfshore)exhauts

Equipment, Design Capability

Romania 70%,

Italy None

3 3

POST AMS FAIR ANALYSES SHEET

- - Fairs held in Africa, Asia, Europe & America - 360+ SSA suppliers screened - 60+ GE Global Vendors screened

- 50+ site visits - 20 SSA vendors prioritized - GE DM vendors..6 committed , 10+ in discussion & 30 interested

Capable suppliers selected for development on commodities & scopes based on business needs e.g. Subsea, TM, Engineering etc.)

© 2011 General Electric Company – Proprietary Information

10 GE Africa

2/20/2014

The success story in Nigeria The SHIP supplier development program for SMEs

Journey

October 2013

1 Phase 1 (Project planning and advisory)

2

December 2013

Phase 2 (Nigerian suppliers on boarded

July 2014

Phase 3 (Recruitment & training at SHIP sites – 56wks)

Phase 4 (On-ground (Nigeria) startup support)

Phase 5 (First Piece Qualification in OneGE Nigeria Emerald facility)

5

3

4

Status

• Exhaust Ducts • Enclosures for GT/ST

• Water, Lube, Fuel Skids

• Packaging • HRSG

• Lube Oil console – TM

Capabilities & Technology to be

transferred

SHIP: Sustainable Homeward Improvement Program (A team of 4 GE global partners)

Ongoing

Completed

Completed

• World-class Engineering Capabilities

Leadership development approach

12 GE Africa

2/20/2014

Leadership Programs target emerging talent and develop our future leaders.

some programs have

existed for over a century

1/3 of our most senior leaders graduated from a Leadership

Program

3000+ on program today

100+ years

OMLP FMP EEDP ITLP HRLP

13 GE Africa

2/20/2014

Crotonville establishes our leadership curriculum and is the heart of GE culture.

Munich, Germany

Rio, Brazil

Bangalore, India

Abu Dhabi, UAE

Shanghai, China

first corporate university founded

1956 1000+ customers

per year

90% of our senior leaders have been through Crotonville

5 global locations:

14 GE Africa

2/20/2014

Reimagining the content

Professional Leader

Foundations of Leadership

Emerging Leader

New Manager Development

Course People Leader

Leadership

Development Course

Individual as Leader

Leadership Essentials


Senior Leader Executive Leader

Advanced Manager Course

Organizational Leader

Manager Development

Course Global Operator



Senior Executive Leader

Business Management Course

Global Strategist

Executive Development Course Global Entrepreneur

Leadership,

Innovation & Growth Global Growth

Leadership Explorations

Learn & Do

Master & Guide

Shape

Financial requirements

16 GE Africa

2/20/2014

Financial support for local development

Primary focus

• GG&O*

• O&G

• Energy

• Transportation

Participating divisions

GE global

suppliers

Stage 1 Funding Financial &

Technical

sponsors

Funding

* Represents first business to initiate supplier development for downstream benefits

Beneficiaries

Facilitating

SME x SME x

SME x SME x

GE Mgt.

reviews

SME x

SME x

Collaborative approach to development

A “One GE” commitment to increase purchases from African suppliers for its regional supply

chain … Providing project finance support to ensure win-win for beneficiaries & financiers

• Serves as an financial support & development vehicle

• Uniquely focused on highest GE supply needs

• Targeting locally based companies

• Cross business mandate … Transport, Energy, O&G, HC

• Developing African suppliers to serve African expansion

Features and Operating mechanics

• Engage international suppliers to train future suppliers

• Financial support to enable technical development

• Engaging financers through firm GE order gaurantees

Monitoring and on ground ramp-up support

Investment support

/Decision

Program Development &

Training

Consultation & evaluation

Local supplier Identification

Engagement cycle

$0.x - $0.xB

Funding

Local African

suppliers

17 GE Africa

2/20/2014

17

SMEs Development finance - Transformational Game Changer

A development finance institution launched in Nigeria

GE Portfolio

Equipment & Service Partial guarantee Sustained technical training for capacity building Operational excellence programs as needed

Solution Finance House

Offering Debt at 10% or less Debt covers Equipment + Service + Training Management oversight (Board)

Customer Solution

Debt funding from Finance House/GE facility for equipment and service Comprehensive technical capacity building program Non-technical capacity building training for management Management oversight

MoU signed on Jan 31st 2014

USD$500M Risk-sharing Investment Vehicle o $100M per sector (Healthcare,

Power, Water, Transportation & Supply Chain)

o Launch in Q2 - 2014

Development finance house

Closing

19 GE Africa

2/20/2014

Benefits of the financial support

A win-win value proposition for GE and Africa providing job

creation and sustainable economic development

+ Upfront cash investment

+ Technology transfer

+ Job creation & capacity building

+ Local & rural industrialization

+ Export potential for SSA and beyond

+ Low cost manufacturing & services

+ Increased commercial opportunities

+ Skilled workforce & capacity building

+ Increased customer satisfaction

+ Export potential for SSA and beyond

20 GE Africa

2/20/2014

GE, Made in Africa – a reality

From vision, to execution,

to industry best practice…..

GE, Made in Africa

21 GE Africa

2/20/2014

22 GE Africa

2/20/2014


OneGE Nigeria – progress update

$1B Investment Announcement – JAN ‘13

OneGE manufacturing facility ground breaking– JUN ‘13

Facility early works; Supplier Roundtable and capability, technology & skills transfer partnership MoU & signing

ceremony – JAN ‘14

Progress on investment

23 GE Africa

2/20/2014


OneGE Multi-Modal Service & Manufacturing Facility

To support GE’s commitment to Vision 20/2020, the multi-modal factory will expand local

capabilities, & serve as regional hub for Service, manufacturing, training, skills & tech transfer.

Multi-modal capability

Knowledge & Technical

Skills Transfer

Local Content:

50% Local content

Technology Centre of

Excellence

C2C / MOU:

Power, Healthcare &

Transport sectors

Employment Supply Chain Investment

Skills / Training Branding Regional Service Hub

24 GE Africa

2/20/2014


Sub-Saharan Africa opportunities

• Machining • Castings

• Hardware • Controls • Engr. skids

• Cladding • Coating • Fabrications

• Forgings

Supply needs:

• Fabrications • Engineered skids • Machining • Controls

• Cladding • Coating • Hardware • Forging

Nigeria multi-use factory

Angola multi-use factory

Supply needs:

ge local supply chain development

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