GE’s Chairman and CEO Jeff Immelt of over 16 years to retire.

Immelt has caught flak due to GE’s share price performance since his appointment shortly before the 9/11 attacks. Under his leadership GE shares have dropped considerably, underperforming the S&P 500 index.

Source: Financial Times

GE was badly hit by the 2008 financial crisis mainly due to its exposure to financial services via GE Capital’s portfolio. Immelt responded by restructuring and firmly focusing GE on industrial activities, including power and energy, oil and gas, aviation, transportation, industrial products and services as well as healthcare. Given its huge installed base, evolving technology and its commitment to services already under Jack Welch, Immelt saw significant commercial opportunity in helping optimize the performance of that installed base. This led to GE’s committing substantial resources to developing the Industrial Internet of Things (IIoT) and its engagement with software through the creation of GE Digital based close to Silicon Valley in San Ramon, CA (let’s not forget that GE’s machines are often the key productive assets at companies implementing Internet of Things/Industrie 4.0 programs). Since the company’s all- time low in March 2009, GE’s share price has grown by over 300%, however possibly not enough to placate investors. Some have complained about overpaying for acquisitions and insufficient focus on operating performance and cash generation.

Nevertheless, Immelt’s reshaping of GE towards industrials, tech and services has been remarkable by any measure. It has helped transform the company’s markets and competitive environment, has influenced competitors’ behaviors and has created global IIoT and digitization momentum. At the recent Electrical Products Group conference, Immelt reaffirmed GE’s industrial/digital focus, strategy and operating framework .

Source: Financial Times

Whether Immelt’s strategy will be ultimately successful will, of course, depend on execution and his successor’s plans. But it will also depend on how market structures evolve and to what extent old economy companies are able to withstand the competitive assault of “digital natives” on their territories in the age of big data and machine learning, something that can be seen vividly in the car manufacturing and mobility space with companies like Tesla and Uber eclipsing the major manufacturers in market valuations.

GE’s major strategic/transformative moves under Immelt show a bold consistency towards the digital/industrial enterprise, but also text-book conventionality: Divestment of non-core and financial businesses (plastics, appliances, water technology, NBC Universal, GE Capital); Major industrial acquisitions to broaden and deepen offerings and create bulk or scale economies in selected market sectors: aerospace, renewables, fossil power, oil and gas and industrial automation; Rapid build-up, both organically and though acquisitions of digital capabilities. Immelt’s strategy has been a long game strategy. Some moves and acquisitions might be questioned as to timing and future orientation or valuations in view of how prices are evolving (fossil power, offshore oil and gas). But the main question will be can a conventional strategic approach designed for industrial age economics be valid in the digital age of platforms, network effects, increasing returns to scale and dematerialization. The jury will be out a long time yet on this.


Following US President Trump’s decision to exit the Paris Climate Accord (PCA), the European Union, China, India, Japan, Australia, Canada and, less clearly, Russia have reaffirmed their commitment. But interestingly, also California’s senate voted for a 100% renewables target for electricity by 2045 which has a good chance of becoming law and Hawaii became the first US state to a pass a law committing to PCA. Other states are expected to follow. Ironically US renewables build-up is strongest in states that voted for Trump due to favorable conditions and electricity export prospects to urban and industrial centers combined with decreasing costs. The International Renewables Energy Agency released a report revealing that jobs in renewables are growing fast reaching almost 10 million globally in 2016. In fact, jobs in solar power in the US have been growing at a rate 17x higher than the average for the economy as a whole, with wind power not far behind. The US Department of Energy estimated that wind power could account for almost 400,000 jobs in the US by 2030. Over 50% of these jobs are in installation, operations and maintenance.

Bloomberg New Energy Finance published New Energy Outlook 2017 in which it projects that the US Paris exit will have at most a marginal, if any, effect on renewables adoption and that power generation from renewable sources will reach 34% globally by 2040, while total renewable investment to that year will reach US $7.4 trillion. It also predicts that levelized cost of electricity from new solar PV will drop 66% and from offshore wind by 71%, while electric vehicles and batteries will see strong growth. The projections differ significantly from those by ExxonMobil which see only 11% share in power generation by renewable sources by 2040.

On June 6th 2017, 2.7% of all European power was generated by offshore wind – a record, causing wholesale power prices to fall by 90% overnight.

Given the size and maturity of onshore wind turbine installed base, GE is making a business out of repowering legacy turbines. The repower program can include increasing a turbine’s rotor size, and upgrades to the gearbox, hub, main shaft, and main bearing assembly. It extends the life of wind turbines by a decade or more, making them more efficient and reliable while also increasing a wind farm’s performance by up to 25%. GE announced that it has already repowered over 300 turbines. The US National Renewable Energy Laboratory estimated that the repowering market could grow to US$ 25 billion by 2030.

Companies are increasingly integrating battery storage into solar and wind power installations.  DONG Energy To Integrate Battery Storage Into Burbo Bank Offshore Wind Farm.  Vestas is reportedly looking for acquisitions or investments in the sector “to increase the global use of wind power and bring costs down”.

Suzlon is eying 40% market share in India’s growing wind power market and a floatation of its Suzlon Global Services subsidiary, which among other things has approximately 4200 MW under management in India and China. The service subsidiary has reportedly a higher debt rating than the parent.



Service driving competitive advantage in the tire industry: Investors are pushing up share prices of tire makers, as they predict that self-driving cars will increase miles driven per vehicle (utilization). Although overall number of vehicles on the roads may decline, many analysts are projecting a significant increase in total miles driven. But some tire makers may have a particular advantage, namely those that shift from being simply a B2C peddler of tires to a more holistic B2B mobility services provider, in a future where vehicles are operated as parts of fleets rather than individually owned. According to JP Morgan analysts, Goodyear may be one of those: “As the model moves more toward B2B, we believe Goodyear’s excellence in offering a service network for fitment, maintenance and repair of its tire fleet will provide a new standard of competition and is key to preserving its competitive moat. While the tires themselves may be a commodity, the service/network is not. Excellence in service, in our view, will be key to sustaining the long-term competitive moat, which is missing in the current model. Tires may ship from China, but the service does not



Wärtsilä says offshore marine players are breaking away from prevalent operating models and changing their “defensive” approach to maintenance, opting instead for lifecycle-oriented service approach with guaranteed asset performance and dynamic maintenance planning. And ABB will run “Collaborative Operations Centers” 24/7 to monitor data sent by vessels from all over the world to troubleshoot problems and provide timely resolution. But remote monitoring can be unpopular with a ship’s crew.

Wärtsilä introduces dedicated organisation to drive digital transformation



Weir Oil & Gas has signed an agreement to acquire pressure control wellhead technologies, systems and services provider KOP Surface Products for US$114m.

About 1,300 global energy service jobs are under threat from the proposed merger of Wood Group and Amec Foster Wheeler (AFW)

Hess Corporation has signed a non-exclusive 10-year global agreement with Wood Group to provide engineering, project management, construction, commissioning, operations and maintenance, integrity management, subsea, and decommissioning services.

Engineering and maintenance provider Bilfinger Industrial Services has secured a three-year contract worth £15 million with BP Chemicals.



Metso and Valmet separated three years ago. Now they are developing different IoT solutions. Metso with Rockwell Automation, Valmet with Tieto.

Kone Elevators lifts profits with IoT and a “Connected Services” strategy

 A Chinese industrial automation and sludge treatment products and services provider Huazhang Technology is acquiring a paper machine service vendor Wuxi Refine Technology Co., based in Wuxi City, Jiangshu Province, with a customer base of twenty paper manufacturers. Through the acquisition Huazhang intends to become a one stop shop for paper machine and other maintenance services and with other add-on acquisitions launch an international service business.

A start-up, Prophesy Sensorlytics has developed an analytics based predictive maintenance solution for pumps and similar equipment: “Our platform monitors 24/7, and it doesn’t just tell you if your bearing is getting bad,” noted Biplab Pal, chief technology officer and founder. “It finds the root cause of your problem and tells you why the bearing is getting bad

The Dubai Electricity and Water Authority (Dewa) signs a 12-year Operating Plant Service Agreement (OPSA) contract with Siemens valued at over US $460 million.


3D PRINTING SPARE PARTS and other technology innovations

Siemens has successfully tested power generation gas turbine blades produced wholly by metal-based 3D printing by UK-based Materials Solutions, which it bought last year – calling it a “breakthrough”. “It rotates with 13,600 rotations-per-minute which means it is the most highly loaded component in the whole gas turbine. So, this blade that weighs 180 gramms will weigh 11 tonnes while rotating with this speed, meaning that it will bear the weight of a double-decker bus.”

Daimler Buses division has explained how it is implementing 3D printing to create components for its customers on-demand. Providing the example of a banknote stowage compartment, Daimler has showcased how it is utilizing the technology to create bespoke parts. According to Daimler, the company has so far 3D printed 780 components with over 150 replacement parts currently undergoing validation.

Volkswagen launches pilot project to produce legacy spare parts 100% through 3D-printing

Seeing is believing: Drones—what are they good for – The Economist on Drones in business. You can also read our drones article with more examples from industry and services.

Innovative maintenance system automatically monitors the underside of trains for faults

Augmented Reality can enhance services for industrial machinery manufacturers writes Michael Blumberg


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