KNOWING WHAT WE KNOW
TBY talks to Fabiola Sojet, CEO of GE, on growth areas, the significance of Colombia to global operations, and current projects.
General Electric (GE) is a very diversified company. Which areas of the business are performing particularly well in Colombia, and which areas have more potential for growth?
GE has been in Colombia since the early 20th century. Over the years, GE's focus has mirrored the broader economic trends in Colombia. A few years ago the country did not have much potential in oil, but today it is a different story. In the last eight years the company has focused on developing the oil and gas sector as well as pursuing other opportunities in the energy and transportation sectors.
GE grew 30% in Latin America in 2011. What does Colombia represent for GE's global operations?
Latin America specifically is one of the most important regions for the company worldwide, being one of the major growth leaders. Colombia contributed a growth rate of more than 130%, which is significant relative to the Latin American region, especially because of the oil and gas sector. Our participation in Latin America today is about 6% of our global operations, and we hope we can increase that participation within the next three years to 10%. GE has expectations in the region; being one of the fastest growing markets in the world where the company can collaborate to develop its infrastructure and a sustainable economy. Samples of GE's commitment to this market are the decision to build our fifth Global Research Center in Rio de Janeiro among other plants intended to supply the oil and gas industry. These plants will provide solution and innovations to the entire Latin America region. Colombia is going through a significant time as there is an estimated portfolio of promising investment. Projects related to the use of high-quality technology could allow the country to take the big leap into modernity. GE has the expertise and innovation that Colombia needs to cover its infrastructure gap and generate overall sustainable development.
In 2010 GE played an important role in the Cartagena Refinery, and the company is planning to grow significantly in the energy sector. What are the most important current and upcoming projects?
Our businesses in Colombia are a success story. After the energy crisis that Colombia experienced in the late 1990s, the country developed an appropriate legal framework and increased political will to develop the sector. We are strong participants in the industry, especially in thermal generation as well as renewable energy, which is just starting to be explored. We have the most advanced technologies in thermal generation and a strong portfolio in fuel, gas, and alternative energies. In oil and gas, we have customers in different areas, from upstream all the way to downstream. With our recent acquisition of the artificial lift technology business, we have an operation in Colombia that is sourcing electro submergible pumps for exploration activities, and they are selling to most of the companies that are exploring now. We are supplying important elements to support production, including pumps, compressors, and equipment for the construction of the pipelines. To explore and produce oil companies need energy. As a result, energy projects are very closely related to oil production and exploration, and GE is also participating in energy, mostly thermal energy related to oil operations.
What are your expectations for the project in Barrancabermeja?
Barrancabermeja is a refinery that has long needed a project to increase its capacity. We have a strong interest in the refinery. The necessary equipment is in place, and it is a matter of removing or expanding our presence there. Barrancabermeja is an important project for the country.
The engines for Copa and Copa Colombia are from GE. What is the potential for further investment in this segment?
One of the most important approaches of GE is oriented toward the development of the aviation sector, where we are a renowned company because we are leaders in manufacturing turbines for airplanes. GE's involvement with airplane engines is a reflection of the dynamics of the country. The increase in the number of people traveling and the number of flights are a result of the country's strong growth. At GE, we aim to work closely in the supply of the engines and even the airplanes for different projects. Our GE Capital business unit leases several aircraft to airlines in Colombia. We not only have an engine business, but also a leasing business. This is another sector of the industry that we expect to grow significantly.
What was the strategy behind the sale of your interests in Banco Colpatria last year?
GE made the decision to concentrate its business globally on industrial production. As a part of that strategy, GE Capital decided to reduce its footprint internationally. The company decided to sell some of its successful and attractive assets. This strategic transaction was a good deal for both parties. GE's partnership with Banco Colpatria was very positive, and it was an excellent starting point for GE Capital in Colombia. Despite GE's involvement in middle market finance, GE's primary focus is as an industrial conglomerate and a technology company. This has been our strength for nearly 100 years. Although GE Capital's participation is still very important in the company's revenues, the company has decided to focus on the industrial sector.
What are the advantages and the main challenges of investing in Colombia?
We understand that energy, infrastructure, and economic development are critically important for Colombia as the country continues progressing. Therefore, we are sure that success will require depth in areas where GE is an expert that excels. Colombia is currently one of the most attractive countries in the region for investment. This is the result of continued policies to open doors to foreign investment and to create legal stability and an attractive environment for FDI. Colombia has a little bit of everything. It is not an oil country, but it has oil. It is not a gold country, but it has gold. Colombia has very good agricultural products like coffee and flowers. It also has a strong industrial sector, even though more infrastructure development is necessary. The size of the country is also an advantage. Colombia is larger than most other countries in the region except for Brazil. However, Colombia needs to be better at execution. This is the nature of the country and the Colombian people. We are very good at planning, have a very high level of education, and have creative and strategic thinkers, excellent economists, the best lawyers, and good statisticians, but at the point of execution we find a way to be slow. We need to improve in this area. But the good thing is that we know that now.
© The Business Year - August 2012