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GE has 13 manufacturing centres in India, why the need for a centre in Pune?
Our investment to build a factory in Pune is tightly tied to our localisation commitment. We realized very early that to be successful in India we need to have ‘In India, for India’ products. The Pune facility is a multi-modal centre, which means we want this to be a manufacturing hub for all GE businesses. The other 13 plants are specific to one industry or vertical. The Pune plant will serve our businesses like aviation, oil and gas, power-generation equipment, perhaps transportation down the line and even healthcare in future.For some of our business like aviation we are manufacturing in Pune for exports. Centre’s which were made with ‘In India, for India’ concept have been successful enough that we can now start using them for export. Aviation is one example.
By when will the centre be ready for production?
We are right in the middle of a ramp up and we will be finally open by mid -2014. We did a very interesting thing even as we launched the Chakan facility we also leased a facility at Ranjengaon in Pune two years back. Even as we were building our infrastructure, we were also building our team, employment, capability, skills in qualifying our management etc. And now as the construction is coming to an end we have started moving these people to the new centre. So far we have moved 50% of our leased facility manufacturing consisting of equipments, machinery, and employees into Chakan.
The total area we have is 67 acres. We are in phase-1 of development, wherein we have built out 250,000 sq ft of manufacturing facility. We have the ability to go up to a 1 million sq ft. I hope we sell more locally and we built more products. By the time we will be finally ready to open we will have an employee base of 500 at Chakan from the current 350.
Why the need to set-up a multi-modal centre?
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We have learnt over time that whenever we have scale, we do really very well. When we are small and divided we don?t take the right level of opportunity. So while these 13 plants are productive in their own terms, we think we can be bigger if all businesses are together.
This multi-modal concept was started a little bit in our energy business (now known as Power & Water). They started to do multiple manufacturing for several of the energy units, in China, and Vietnam, and we learnt from those experiences. We also realized that if at any time one business is slow then we can rotate resources to other business.
Other than India, we have a multi-modal centre in Nigeria, and we may have one in Latin America. We do have legacy multi-modal centre (one each) in China, Vietnam, and Hungary.
You have set up the entire supply chain for GE?s power business in India, how has been the growth in this sector?
Our prime business is heavy duty gas turbine engines. There is a lot of potential and need in India for power generation and that is why three years back we made a serious commitment to be in India and invested in being a local player. India has been a little slow than what we thought, but we are here for the long term.
We did some good sales of heavy duty gas turbines back in 2010-11 with Reliance. Since then a lot of projects have been on hold due to funding issues, economy, gas availability etc. We had a really good momentum back then but since then the projects have either been stalled, slow, or pushed down. We have been a bit disappointed. At the same time though in the renewals, especially in the Wind turbines segment we have done well.
If you compare the GDP numbers to some of the other ASEAN countries or to China then yes, growth in India has dropped. But if you look at how India?s economy matches up to GE's product mix, its an amazing fit. Whether the growth rate is 5.4% or 4% or 8%, it still is a perfect market for GE. There are other markets as well but India is key to our Asia presence.
GE earlier this year announced the creation of Distributed Power as an independent business unit, does India fit in that business?
Distributed power basically means power at the point of user, and closer to the consumption point or is off-grid. Though we are new group we are $5 - $6 billion piece of GE Power. The $1.4 billion investment that the company announced is to drive the distributed power (DP) growth. Our studies indicate that DP will grow faster than grid power. There is still a good demand for centralized grid power and heavy duty gas turbines, but DP is growing faster
India is a diesel power-gen market, whereas we have focused on natural gas applications on larger scale. We also hope that as gas supply in India improves we will have a bigger role to play.
You have set up the supply chain for GE power in India, how crucial is the supply chain management?
For us supply chain means manufacturing, sourcing/procurement, quality and environment health and safety. In India, that is why Pune is a big focus area. In the past we did a lot of distribution by importing products, but then it has limitation as it increases costs (due to currency fluctuation), you don't get the right features etc. So we put manufacturing locally. We have a huge engineering team in Jack Welch Technology Centre, as well as in Hyderababd in our Energy engineering centre.
