By Beatrice Thomas
General Electric’s man in the region, Nabil Habayeb, discusses the giant US manufacturer’s role in helping local countries build up not only their infrastructure but their workforces as well
Nabil Habayeb’s office is a modest set-up. Occupying one corner of an executive floor in General Electric Co (GE)’s headquarters in Dubai Internet City, there’s a few framed family photos on bookshelves and his desk, a three-piece lounge on the other side of the room, a few coffee table books and even an Emirates Airline model plane, presumably in a nod to the two companies’ extensive links.
Sitting with the president and CEO of the global manufacturing giant’s Middle East, North Africa and Turkey (MENAT) operations, a particular painting hanging above his head catches my eye. It’s a piece by Bahraini painter Raif Shehab, he informs me. “It was a gift from my employees when I celebrated 20 years with the company,” he adds, before casually dropping the fact that he is currently celebrating 32 years with GE.
Indeed, while his office may be rather modest, his achievements at GE are anything but.
Under his watch, revenue in this region grew by 11 percent last year to $10bn, accounting for 6.85 percent of GE’s $146bn global turnover, while its regional order book has almost doubled that with a 23 percent increase to $12bn in 2013, more than 10 percent of the global total.
Since taking on his current role in 2004, the region has grown from a turnover of $1.5bn, with staff numbers increasing almost four-fold from 1,200 to more than 4,200 people.
Habayeb says the region now accounts for almost 35 percent of GE’s $181bn industrial backlog globally and while by no means the biggest market (it is the second-smallest after the Americas) it is one of the fastest-growing along with Russia. He expects “double-digit” growth again this year.
“In the fourth quarter of last year, this region was bigger than Europe,” he says. “So while you see the numbers in total, this is still the largest region outside the United States after Europe.”
Just what is driving sales comes almost entirely down to the Fairfield, Connecticut-based company’s industrial segment — comprising oil and gas, power and water and aviation — in what reflects a marked push away from the company’s finance business and towards its industrial side following the 2008 financial crisis. In early August, GE listed its credit card business, Synchrony Financial, in a move that is tipped to bring its profits from finance down from 45 percent to less than a quarter by 2016.
Looking at GE’s second-quarter results, these sectors collectively accounted for $26.2bn in global revenue, up 7 percent quarter on quarter. Overall revenues rose 3 percent to $36.2bn, while operating profits also rose 7 percent to $3.9bn.
In MENAT, industrial sales are just as strong, buoyed by recent mega deals such as the record $40bn in commitments GE secured in two days at the Dubai Airshow through primarily Emirates, Etihad and Qatar Airways and led by the GE9X, the sole-source engine for Boeing’s soon-to-be-developed 777X. Boeing said it achieved 259 orders of this plane from a total $101.5bn in orders at the Dubai event.
However, as strong as GE’s aviation division is — it grew at a compound annual growth rate of 8 percent to nearly $22bn in 2013, accounting for 15 percent of GE’s $146bn in global revenue — it is not its single biggest revenue driver in the region, with Habayeb saying it is split fairly evenly among the remaining industrial sectors.
The company, which had a $246bn backlog at the end of the second quarter, currently supports the generation of two-thirds of the region’s electricity, and purifies 800 million litres of water daily for drinking, irrigation and municipal uses across the MENA region.
Nearly 90 percent of hospitals in the Middle East are equipped with GE technologies — from radiography systems to clinical consumables, diagnostic cardiology solutions and PET/CT scanners.
Overall, Saudi Arabia, the UAE, Algeria and Turkey represent the biggest countries for growth, Habayeb says.
In 2012, GE announced that it planned to invest $1bn in Saudi Arabia alone to boost its presence in the kingdom, with the energy, healthcare and innovation sectors all to be targeted as it doubles GE’s workforce in the kingdom to 2,000 by 2015.
Habayeb says GE operates one of three manufacturing plants in the region in Saudi Arabia, where GE has had a presence for almost as long as its 80 years in the region, while he notes that the kingdom has also become a centre of innovation.
He says it is part of a broader strategy that has evolved from what he describes as a “come build me stuff” approach to forming joint ventures with the likes of Saudi Aramco, SABIC and Saudi Electricity Company to the desire, nowadays, to self-innovate. Globally, GE is also strategically targeting a bigger spend on research. The company founded by Thomas Edison in 1892, and which has to its credit the first practical incandescent light bulb, first US Central Power Station and first x-ray machine, is again trying to focus on what it does best — inventing.
“After the Arab Spring the focus of the governments was beyond what we were doing,” Habayeb explains. He says now there are three key things on their minds: security, including border, energy, food and water; efficiency and the strong operation of government, healthcare, education and the financial system; and, lastly, capability in training up and creating jobs for young people as well as developing the research and development (R&D) sector.
“Governments started coming to us and saying: ‘you’ve been here for all these years, now if you want to continue to grow and to participate in this growth market, I want you to help me achieve those things’,” he says. “So, the play for us in Saudi, in the UAE, in Algeria, in Turkey, in Iraq, was how do we become part of the fabric and help the key stakeholders achieve those objectives, which meant we, too, have to localise manufacturing and service capability to help create jobs… and transfer the skill sets that we used to bring from the outside.”
As part of this shift in direction GE has built a manufacturing plant for power generation in Saudi Arabia, with the first equipment, which also includes healthcare equipment, due to roll off the production lines in 2016. A traineeship programme has also been developed in partnership with the Ministry of Labour, with the majority of graduates then employed by GE.
Habayeb is also just as proud of the company’s role in fostering higher female workforce participation, starting with a joint project with Saudi Aramco and Tata Consultancy Services for Saudi’s first all-female business process services and training centre in Riyadh. Women working at the centre are helping Saudi Aramco and GE manage supply chains, with the ultimate goal to recruit and train up to 3,000 women, including 1,000 to manage GE business.
In the UAE and aside from the enormous sales power of the country’s aviation businesses, with the likes of Emirates, Etihad Airways and flydubai leading the growth, he says GE is also angling for a slice of its future power generation needs, having secured contracts in Abu Dhabi, including with industry giants ZADCO and ADCO.
The UAE has said it will spend about $20bn on nuclear power plants, with four plants set to be in commercial operations by 2020, producing 5,600MW of clean electricity which will meet up to a quarter of the country’s energy needs.
Korea Electric Power Corp won a contract in 2009 to complete four nuclear reactors, the first of which is expected to commence operations in 2017, though Habayeb says GE, which was unsuccessful in that particular bid, is keen to play a role in this developing field, as well as in renewable energy.
In Algeria, another growth market identified by Habayeb, GE last year secured a company-record power generation order to supply 8.5GW of power, with the value of supplying equipment, which it will be manufacturing in the North African nation, alone about $2bn.
Meanwhile, in Turkey its focus is on renewable energy, which is part of GE’s Ecomagination concept, a broader strategy to deliver more clean energy for the world, and it provides around 500MW of wind energy across 15 sites.
Habayeb says Qatar was a big growth country a few years ago, but “LNG projects have reached saturation” and it was more aviation now, with the country home to GE’s only aviation maintenance centre outside of the US. Iraq, too, was growing, until the civil unrest that began mid-year.
“I’m not going to talk about the political part,” he says when asked about the situation in Iraq. “But, what’s happening in Iraq concerns us first of all from the security of our people and this is our primary focus now. There is huge potential in Iraq — it needs everything from monetising the oil and gas to power generation, to healthcare, to the transportation system and we have been working on a lot of these projects and we continue to support our customers now.
“The impact is going to be a delay in some of the decision-making for some of the big projects, a delay in the execution because of the security situation and I think the biggest concern also is the confidence level that the financial institutions will have in investing in Iraq.”
In 2012, Habayeb said the potential following the Arab Spring uprisings was akin to another Saudi Arabia and could reap between $6bn to $10bn in revenue for GE. Has it come to pass?
“Whatever government comes in place after the Arab Spring their focus was 'how can I respond quickly to people’s needs, building infrastructure, responding quickly to improving the lives of the people' — that’s what people want to see, so that created a lot of opportunity from our point of view,” he says. “In Iraq, or any other place where security of the people plays into the decision making, that slows down. The Arab Spring security was manageable, but when you have a civil war… it delays the timing of that opportunity.”
Outlining GE’s strategy, Habayeb is no hack when it comes to understanding the technology of which he speaks. Graduating with a Master’s Degree in Mechanical Engineering at Syracuse University in his native Lebanon in 1982, he joined GE Power Systems’ Field Engineering Programme that same year and embarked on several field assignments internationally. In 1985 he moved to Dubai where he held several sales positions before moving to the US as commercial operations manager for the Middle East and, later, power systems sales manager for Egypt, Africa and East Mediterranean countries.
Returning to the Middle East in 1993 as the manager of the western region for Saudi Arabia he made his way up the ranks to his most recent past role as regional executive and general manager, GE Energy, AIM Region, ahead of his promotion to president and CEO in 2004. “When we came to look at this market we changed the way that we used to think about this region from a traditional way of saying ‘I have a product, how can I sell it into a market’… to saying ‘I have a market, what does it need to achieve',” he says of how he came to be head of the MENAT region.
“There were a lot of perceptions about the Middle East, about Africa, that they didn’t buy the latest technology or you won’t be paid good margins and these were perceptions, which all turned out to be totally wrong, because you take a look at the technology our customers are buying — it’s the latest technology, they are actually setting the standards for the industries, whether it’s oil and gas in Qatar and Saudi Arabia and the UAE, whether it’s aviation and we see that with all the emerging airlines that we have in the region… this region has really set new standards for a lot of the global industries.”
In 2011 GE grew in the region enough that it had to separate Sub-Sahara Africa from the Middle East and Africa and put even more focus and concentration on the former. In addition it put more focus on Turkey and Pakistan, with Habayeb saying Turkey was by then viewed as an emerging market.
These days, the 56-year-old spends about 75 percent of his time travelling across the region in what he believes is the only way to truly understand and motivate staff.
“My focus is to get the best out of the people,” he says. “How do you empower them, how do you guide them, how do you mentor them, how do you hold them accountable? My leadership style focuses on advice that my late father gave to me 32 years ago. On the day that I started the job he said: ‘I have two pieces of advice for you — keep your name clean and make a difference’, and I think that’s what I try to do to get the best out of the people.”
His proudest achievement, he says, is that GE “is really part of the fabric in all of these big markets”. “This is the biggest achievement,” he says. “There will be less dependence on Dubai as a headquarters and if I can achieve that, each of these countries, which are big enough to be regions on their own, are sustainable and have the capability; that’s the biggest achievement. We have reached that in a few countries and we’re building it up in the rest.”
As the interview wraps up, I learn Habayeb is off to give a talk at the London Business School in Dubai, mentoring the next generation of business leaders in the emirate.
No doubt they will be aspiring to a similar level of success.