| Stepping into the millennium with a hundred-year-old
company was the challenge Bob Nardelli took up in '95 as the new CEO and
president of GE Power, one of twelve businesses in General Electric."As
we look back, life was somewhat predictable, normal, digestible," Nardelli
recently told World Cogeneration, but as we move to 2000, the rate of change
is more rapid, much broader and has far-reaching impact.
In terms of new power demand, GE forecasts a growth of 90 gigawatts a year over the next 10 years with half going to Asia, 30% to Europe and 20% to the Americas. In the short term, GE sees promising growth in the U.S.
Whether you call it re-regulation as the utilities do, or deregulation as the IPP's see it, there is a new energy playbook. Customer conversions is how Nardelli coined it and offers examples of Enron, Shell, Duke and others moving up the chain from oil and gas to power generation or from power generation to oil and gas, with interests in transmission and distribution and energy services. And for each of these initiatives we have put together a product or service to be more responsive to the evolving industry," Nardelli said, adding that fifty percent of '98 revenues came from businesses that were not a part of GE in '94. Awe want to move from a historical transactional relationship to a contractual, long-term partnership which will give us a tremendous competitive advantage," Nardelli summarized.
If we look at our business today," Nardelli continued" we can break it into two fundamental categories: energy products and energy services.
Within energy products are Nuovo Pignone, S and S Energy Products, Industrial Aeroderivatives, Power Generation, GE Nuclear and Elliott.
Nardelli forecasts the new H class technology combined-cycle power block will break the 60 percent barrier in thermal efficiency based on a completed, full speed, no-load testing at GE's Greenville, SC plant.
GE Power Systems consolidated its services components into GE Energy Services, headquartered in Atlanta, GA to better address the changing needs of traditional service customers.
Along with its expanded, integrated approach to the energy market, a major thrust for GE Power Systems is an intensive quality program called Six Sigma," a rigorous, highly disciplined process to reduce defects and drive quality improvements throughout the business.
Eat Power Systems, we've spent $20-30 million a year investing in this initiative," said Nardelli. In 1996, we started with a handful of people and about 260 projects. Today over half of our total work force has been exposed to Six Sigma training, at least 600 are full-time Six Sigma employees, and we're involved in about 5,200 projects.
Nardelli said that the Six Sigma effort resulted in a cost savings of about $10 million in the first year and $95 million last year, with that figure expected to reach $200 million this year. This activity greatly enhances our ability to serve our customers more cost-effectively in the highly competitive global market,
" he said.
Along with this growth in services, GE Power Systems continues to invest in new gas turbine technology, spending more in the past three years than in any previous decade in the company's 100-year history, Nardelli said.
Nardelli started his career at GE in 1971, advancing through manufacturing management positions in the company's Appliances, Lighting and Transportation Systems business units. He was named to his current position with GE Power Systems in May, 1995. Nardelli is also a senior vice president of General Electric Company and is a member of the Board of Directors of GE Capital Corporation.