Tuesday, Oct 24, 2017
Conglomerate | Middle East | Saudi Arabia

General Electric

A partner in the transformation of Saudi Arabia


11 months ago

Hisham Al Bahkali, President & CEO of General Electric, Saudi Arabia & Bahrain
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Hisham Al Bahkali

President & CEO of General Electric, Saudi Arabia & Bahrain

Having been present in Saudi Arabia for more than 80 years, General Electric announced investments in the kingdom totaling more than $3 billion in 2016. Hisham Al Bahkali, President and CEO of GE in Saudi Arabia and Bahrain, explains why the ‘digital industrial’ giant is committed to helping the kingdom realize Vision 2030, its ambitious plan for economic diversification.

 

What makes Saudi Arabia’s Vision 2030 different from its predecessors, and how confident are you that it can engender the necessary diversification of the kingdom’s economy?

Saudi Vision 2030 is bold and comprehensive, and it covers many areas that were not covered in the past. There is a drive for accountability as well as clearly articulated measurements and KPIs related to the execution of this vision. It is clear the Saudi leadership is behind it. His Royal Highness Prince Mohammed Bin Salman, is especially serious about the execution of this vision.

This is a holistic vision that involves bringing the private sector into the picture and having private companies play a bigger role in the growth of the country. It is focused on supporting diversification, growing the contribution of SMEs, and bringing in digital elements. These are just a few examples. You can see that all of these elements are connected with each other. The KPIs that I just mentioned affect everyone, from ministers to the people. Everyone must work together to execute this vision for the benefit of the country. Taking all this into account, I think this vision for Saudi is completely different than the economic plans that came before.

 

GE has been operating in the kingdom for over 80 years. You have stepped up your commitments in KSA over the past four years, culminating in the announcement in May 2016 of more than $3 billion in investments. How has Vision 2030 shaped your investment and diversification plans in the kingdom, and how important is it for an MNC like GE to have the security and certitude of a long-term, government-led economic vision before committing to an emerging market like KSA?

In each decade that GE has been present in Saudi Arabia, we have done something different in the kingdom. From tapping oil resources, to helping different regions have access to electricity, to supporting aviation and the air force, to improving the healthcare system, and establishing manufacturing and innovation. We have, in effect, focused on different areas in different decades as the economy has developed.

In 2012, GE initiated something different in Saudi Arabia, which we referred to as Project Kingdom. We started to support the economy by undertaking projects in three areas: energy, innovation and healthcare. Those areas were very important for the kingdom. When we tackled these areas, we supported manufacturing localization and people’s education. We started different initiatives with R&D and innovation that were led by local Saudis. In total, we invested around $1 billion in these initiatives and planted a seed in those three areas. All of these projects were completed within three years and in consultation with His Royal Highness Prince Mohammed Bin Salman and the leadership of the kingdom, we continued our vision of localization. This fits into the ‘glocalization’ vision of General Electric. We have partnered with different investors and industrial companies like Saudi Arabian Industrial Investments Company (SAIIC), Saudi Aramco, SEC, and others, to support the economic transformation of the nation.

When Vision 2030 was formally launched, we were already working on the next phase of our Saudi transformation agenda. So, it was a great opportunity for us to be aligned. Around one month after Vision 2030 was revealed to the world, we announced our second ‘cluster’ of major investments in the kingdom, which we called "Partners for Transformation”. This includes a $3 billion investment plan developed in conjunction with SAIIC and many other partners. This new cluster of investments is shaped by, and directly supports Saudi Vision 2030.

 

Your investment strategy in KSA appears to mirror your global strategy for strengthening your manufacturing and industrial operations and shedding your finance and consumer business. How important are your Saudi operations to the wider group and to what extent do your investment plans here reflect a wider group strategy towards close cooperation with governments in emerging markets?

GE operates in 180 countries with Saudi Arabia certainly being an important market in a region that contributes significantly to the group portfolio. If you look at GE 10 years ago, and you compare GE’s business and revenue outside the United States today, you will see that General Electric’s strategy has shifted towards a much more global footprint.

Today, globalization for us really means glocalization. We bring value to the country, by introducing technology and supporting the diversification of the economy, focusing on building local capabilities, nurturing young talent and fostering innovation. We look to build an entire ecosystem that benefits SMEs, with all of this being spearheaded by Saudi leaders. GE has invested to ensure that the company’s vision in the kingdom is enacted by Saudi nationals who were born and raised here. We are not brought in from outside. This is the good thing about General Electric – it leads by example. The company starts by investing in its people first, then new technologies and other local capabilities.

 

GE is positioning itself globally as the world’s leading ‘digital industrial company’. Through technologies such as Predix, your group is playing an active role in spearheading the fourth industrial revolution worldwide. How are you applying your ‘digital industrial’ strategies and expertise here in KSA, in line with Vision 2030?

It is great news for us that GE has become a leading digital industrial company and it has taken this initiative across the globe. This approach is very much aligned with Vision 2030; His Royal Highness Prince Mohammed Bin Salman is very interested in digitization. We recently hosted a (digital transformation) event called Minds + Machines in Dammam. These pivotal GE events are held in key locations around the world and led by Jeff Immelt himself. So, when Saudi Arabia was selected to host Minds + Machines in 2016, we worked very hard on it. Jeff Immelt led the presentations to the 700-strong audience that included senior members of the government and the Royal Court. He later met with His Royal Highness Prince Mohammed Bin Salman to discuss Minds + Machines and our vision for Saudi. On the same day, we announced five separate digital initiatives in the kingdom. These partnerships are with the Ministry of Health, Saudi Aramco, Saudi Electricity Company (SEC), Saudi Telecom Company (STC) and TAQNIA.

After making these announcements, we received a number of requests from different customers requesting GE’s support with digital solutions to help support their industrial assets in Saudi Arabia – to drive higher levels of productivity. This is a great example of how we are aligned with Vision 2030, and this is what His Royal Highness Prince Mohammed Bin Salman is looking for.

Not only that, but one of our customers said: “I’m ready to be your demonstration vehicle for other manufacturers who cannot yet see the potential of digital transformation.” We still have lots of work to do in this area, but this positive start is very encouraging.

 

One of the targets of Vision 2030 is to raise the economic contribution of SMEs from 20% of GDP to 35% of GDP. You have spoken in the past about the importance of ‘glocalization’ to your operations here in the kingdom. How would you describe GE’s contribution to enhancing the SME ecosystem here?

This is one of the topics closest to my heart, because one of my tasks as a leader of GE in Saudi Arabia is to promote SMEs and local suppliers as part of our local supply chain and broader ecosystem. So, every time we meet as a team we think about new ways we can support.

We have been working with Saudi Aramco for several years to engage with SMEs and ensure that they have the capacity to be qualified as GE suppliers. This is obviously good for the local supply chain, good for GE, and good for Aramco’s In Kingdom Total Value Add (IKTVA) program, of which we are a big supporter.

By the way, it's not easy to qualify as a GE supplier. Sometimes, it can take a very significant investment from GE to qualify a new supplier. But this investment is not important to us; what matters is that we can find Saudi companies to support GE’s manufacturing pipeline, whether for the Saudi market or for exports elsewhere.

Earlier this year, more than 300 business leaders from over 20 countries convened in Riyadh for our GE Global Supplier Forum held under the patronage of His Royal Highness Prince Mohammed Bin Salman. The event focused on the significant opportunities for building a high-value supply chain with Saudi Arabia as a strategic international hub.

As a key ‘Partner for Transformation’ of Saudi Arabia, GE organized this global event in the kingdom to help develop high-value supply chains locally through our own international suppliers, and also to highlight to them the opportunities for inward investment and partnerships in the kingdom. GE’s suppliers from the US, Europe, Asia and the MENAT region also attended the event. The entire forum was facilitated by GE in partnership with a number of government agencies and leading Saudi businesses.

Several ministers attended and we had 10 booths, in what we called ‘The Saudi Industry Exchange’, that enabled different government agencies and our key Saudi business partners to meet the global suppliers and the local suppliers, and see how they can help to establish or grow their business in the kingdom. GE is an open book for everybody. If you want, as a global supplier, to invest in Saudi Arabia, we'll introduce you to the right people. If you are a local SME and you want be a supplier for GE, we can qualify you at our own investment. And if you are already qualified but you want to increase your portfolio, then you can take your product international through our global supply chain and network.

From our own survey conducted after the global supplier event in June, we found that 40% of those who came from outside the country are making concrete plans to invest in Saudi. At this stage, so soon after the event, this is very significant.

 

In a country synonymous with oil, Vision 2030 is taking tentative steps towards the development of a renewable energy market, with an initial target of generating 9.5 GW from renewable sources by 2023. What role do you envision GE playing in developing the renewable energy sector here?

I think this is very important for us as well, because we know that GE needs to be supportive on this front. We have launched two pilot programs for GE Wind in Saudi Arabia. In the coming months, you will see wind energy, delivered by GE, in the Saudi Arabian desert for the very first time. In my opinion, when everybody sees these two wind turbines, one in the north of the country and one in the center, delivering megawatts, this will herald a new era of renewable energy as it will be seen as real, and it will demonstrate that action is being taken to support the renewables targets of Vision 2030. I'm very proud that GE has established these initiatives in conjunction with our partners SEC and Saudi Aramco.

 

One of the things you mentioned before was this company's commitment to Saudi talent, not just in the leadership but across the board. Obviously, that's very intertwined with the Vision 2030 goals. Some foreign investors might look at localization requirements as a burden on them, but you're not doing that. Why have you embraced localization to such a large extent, and what specific initiatives do you have to target the young talent in a country where 50% of the population is aged under 25?

At GE we have always had a strong belief in Saudi talent and in particular, Saudi female talent. We have a well-educated and talented young population who are inspired by the leadership and Vision 2030 and they want to do everything they can to contribute to the success of the country. What we seek to do is create high-quality, career opportunities for young Saudis who can be part of the GE vision. This is not about filling Saudization quotas. At GE we take a very different view. This is about the right people for the right jobs. And we have the right people here in the country.

We started with different programs, with one of the most critical being to find highly qualified engineers and technicians, both female and male.

From an engineering standpoint, we established a good relationship with King Fahd University of Petroleum and Minerals (KFUPM), and we created a co-op program and a scholarship program. This gives us a good source of talent, as KFUPM is one of the most prestigious universities worldwide.

We looked at where to find the best female engineers. We know that Alfaisal University has started to run programs for female engineers, so we are keeping an eye on that. We are currently running co-op programs with Alfaisal as well as Effat University.

Also, in conjunction with King Abdullah's educational program, we began to hire Saudi female engineers who had graduated from Canada and the USA, and we employed them at the GE Manufacturing & Technology Center (GEMTEC) in the 2nd Industrial City, Dammam. Their performance was really first-class, so they were promoted and now they are leading production cells. You can now see a Saudi female managing several Saudi male engineers.

We have Saudi women working as petroleum engineers, electrical engineers, lawyers, corporate audit staff and managing risk assessment for projects. At GE, we depend on the full spectrum of Saudi talent.

From a vocational training standpoint, we have different programs with the Technical and Vocational Training Corporation (TVTC), and have trained about 450 people so far. From this total, we hired around 300, because at GE we can only hire the best. Many of them have worked around the world representing GE, so they are not there just to help us fill our Saudization quotas.

Over the last couple of years, we also took over 30 Saudi women to Chicago and Dallas, for healthcare training programs. Everyone was very impressed with their capabilities.

In 2014, GE decided to run a tailored course for Saudi female CEOs at our management campus in Crotonville. They were drawn from a broad range of professions. They met the top management at GE and learnt a lot about leadership. We were very proud of them and they became great ambassadors for GE in return. No company had done this before.

A few months ago, we ran a similar female CEO program for the MENAT region, with around 20 women from Saudi Arabia going to Crotonville. They were certainly amongst the best in the class. The feedback I received was that the Saudi women were the most confident and accomplished, so we are all very proud of them.

 

At a time when US-Saudi relations are being tested by JASTA and disagreements over Iran and Yemen, GE is an example of a US-based company that has shown confidence in the potential and direction of the kingdom. How do you see the US-Saudi relationship evolving under the guidance of the next generation of Saudi leaders and what role do you think US companies can play in the successful realization of Vision 2030?

The relationship between Saudi Arabia and the United States is a very strategic one. I think it's a very good relationship in general and it's very important to strengthen it going forward. From our standpoint, GE will continue working towards our vision in Saudi Arabia. In fact, we are actively seeking opportunities to accelerate our investment. This has been said loud and clear.

We are a great partner for Saudi Arabia. We are friends. We hope that nothing will affect this now or in the future.

To those who have not yet seen the kingdom for themselves, we invite them to look at our examples and recognize the talent and growth opportunities here. For example, at our GE Global Supplier Forum, we invited international companies, including American, who may not be thinking the same way we are, to come and see for themselves, and be exposed to what we experience every day.

 

You are a Saudi citizen, born and educated here. What are your personal reflections on GE’s potential to make a positive contribution to the next stage of the kingdom’s development under your guidance and leadership?

We have a great relationship with the government at the highest level, and we share a common vision. In my opinion, the presence of a Saudi leader who understands the realities on the ground is very important for our continued success. Understanding the culture, understanding the vision, understanding the people, understanding the processes, understanding the different entities, helps sustain the relationship.

In return, General Electric did not spare any cost in developing me and other Saudi leaders. In my 20 years at GE, I have been given challenging opportunities and the company has invested in my continued education and training. GE invests in Saudi people and trusts in Saudi people. Saudi leaders at GE are executing the GE vision in Saudi Arabia and supporting the integration of the aims of Vision 2030 and making sure that it works. I am supported by great teams, consisting of both Saudis and non-Saudis. We have our rhythm. So, I'm feeling very proud that I'm delivering on my commitment, and I feel proud that GE has entrusted me as a Saudi national with this position. 



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