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London Calling: Ex-Im Shutdown Prompts GE to Look Elsewhere for Export Financing

By Tomas Kellner

GE has signed a new export deal with the UK Government that could create as many as a thousand jobs in the country.

Today’s announcement comes on the heels of a similar agreement last week with the French export credit agency COFACE that could create 400 jobs there, making this GE’s second ECA agreement with a foreign government lender since Congress failed to reauthorize the U.S. Export-Import Bank in June.

Over the past weeks, headlines in the United States, Europe and Asia have touted a series of new agreements on global trade as GE and other companies have been seeking to blunt the impact of the U.S. Ex-Im Bank’s lapse in operations. The U.S. Congress did not renew the Ex-Im Bank, as it is commonly known, at the end of June. Since then, the Bank has been unable to provide new loans, making the United States the only major industrial country to operate without an export credit agency.

While U.S. companies continue to urge Congress to renew the Bank, many have been forced to pursue alternative financing for their global customers or risk losing business. In addition to GE’s announcements last week, Boeing and Orbital Sciences Corporation, a Virginia-based satellite company, have reported lost satellite deals resulting from a lack of Ex-Im financing.

Top: GE’s H80 turboprop engine inside a testing cell in Prague. Above: The blades of an aeroderivative turbine. Images credit: GE Reports

Today’s agreement with the UK export credit agency UK Export Finance (UKEF), will unlock $12 billion in financing for UK-manufactured exports. The agreement will support both confirmed and potential orders in a number of international markets including Brazil, Ghana, India and Mozambique – markets that either require ECA financing or where such financing is critical to secure a competitive advantage. GE estimates that winning these orders will help it create up to 1000 new jobs in the UK in the energy sector.

“We are doing everything we can to make Britain the best place in Europe to start, finance or grow a business,” said British Prime Minister David Cameron. “GE’s substantial commitment through this agreement is fantastic news. It will provide jobs and security for people working in the energy sector and elsewhere. It is a vote of confidence in our long term economic plan.”

GE is already one of the leading investors into the UK, investing over $21 billion dollars in the UK since 2003. As part of the deal, UKEF has added GE as a member of its Direct Lending Facility Partnership Panel, which will allow the company to provide technical, commercial and financial solutions to its customers.

GE Aviation already makes in the UK wing components for Airbus A380 (above) and A350 aircraft. Image credit: Adam Senatori/GE Reports 

Prior to today’s UKEF agreement, GE Chairman and CEO Jeff Immelt visited Paris to formalize GE’s agreement with COFACE, which could ultimately create 400 jobs at GE’s facility in Belfort.

GE also announced last week that it would move 100 jobs responsible for final assembly of aeroderivative turbines from the U.S. to Hungary and China to ensure customer access to Export Credit Agency (ECA) financing in those countries. Additionally, last week, GE Aviation announced that it would create a $400 million turboprop engine development, test and production operation in Europe that could ultimately support between 500 to 1000 jobs.

GE has been in close talks over recent months with various ECAs in order to secure funding for its customers. The company made it clear that it would expand its operations in markets where ECA financing is available based on a lack of ECA financing at home.

“In today’s competitive environment, countries that have a functional Export Credit Agency (ECA) will attract investment,” Immelt said. “Export finance is a critical tool we use to support our customers. Without it, we can’t compete against foreign competitors who enjoy ECA financing from their governments.”

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What's Powering the World's Best-selling Plane?

On Wednesday, Boeing's 737 passenger jet became the best-selling plane of all time when the company delivered its 8,000th model to United Airlines. 

United was the first airline to order and take delivery of the 737-200 in 1968. Since 1965, United has taken delivery of more than 550 737s and operated nearly every model.

The combined 737 family has surpassed 11,000 orders, and Boeing has more than 1,900 orders for the latest version aircraft: the next-generation 737 MAX. Stacked on top of each other, the planes would reach more than 77 miles high, past the 62-mile mark where space officially begins.

Boeing engineers started building the 737 in the 1960s to compete with France’s Caravelle, Britain’s BAC One-Eleven, and the iconic McDonnell Douglas DC-9 aircraft.

The vast majority of the 737s have been powered by technology with GE pedigree. CFM International, a joint venture between GE and Snecma (Safran), has been the exclusive jet engine supplier for each new generation of the aircraft ever since Boeing started making an improved version of the plane, the Boeing 737-300, in 1984.

GE and Snecma launched their joint venture in 1974. The goal was to grow their presence in the short-to-medium-range aircraft market dominated by jet engines using the classic low-bypass turbofan design, like Pratt & Whitney’s JT8D engine.

CFM engineers developed a new high-bypass engine similar to jet engines powering long-haul aircraft like the Boeing 747, with improved fuel consumption, reduced noise and quick turnaround time at the airport.

Since the engine, called the CFM56, was also bigger than its predecessors and the 737 sits relatively close to the ground, Boeing engineers had to redesign the wing and suspend the engine in front of it, rather than below. The solution gives the engine its trademark oval opening.

Today, there are more than 13,500 CFM56 engines powering planes used by 300 operators around the world. Most of the planes are 737s, but the engine family also powers Airbus and other aircraft.

CFM is now developing a next-generation engine called LEAP for the newest version of the Boeing 737 – the 737 MAX. It will enter service in 2017. The LEAP engine is the first commercial jet engine in history to use 3-D printed fuel nozzles and special ceramic materials called ceramic matrix composites in its hot section to improve efficiency and cut emissions. The LEAP-powered 737 MAX will be 14 percent more fuel efficient than the current version. This could translate into billions in savings.

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Protein Shake: GE Adds Muscle to Life Sciences Arm as New Class of Biotech Drugs Takes Off

For most of history, sick people swallowed simple chemicals to get better. From penicillin to Prozac, most common drugs have molecules with a few dozen atoms that are relatively easy to produce.

But advances in research have brought a new class of complex drugs, built from thousands of atoms strung into proteins. They are called biopharmaceuticals. Insulin, used for treating diabetes, may be the best known protein, but other biopharmaceuticals can be used to treat cancer and other diseases like rheumatoid arthritis. The group also includes many vaccines.

With advances in biomedicine, biopharmaceuticals have become the fastest growing class of drugs. They have a market size of about $100 billion and account for a quarter of all spending on medicines.

Making biopharmaceuticals is not easy. Biotech companies do it by expressing snippets of DNA inside host cells. These cells live and multiply in special vessels called bioreactors.

GE Healthcare Life Sciences acquired three Thermo Fisher Scientific businesses. The deal will help GE play a large role in the vibrant, $100 billion biopharmaceuticals market.

“Because of that chemical and structural complexity, you need to invest a lot of effort in manufacturing,” says Nigel Darby, vice president of biotechnologies and chief technology officer at GE Healthcare Life Sciences. “Once you express your protein, it swims in a mixture of hundreds if not thousands of other proteins. Your second challenge is to find the incredibly complicated molecule and make it into a single, well-characterized pure product so that you get a safe drug.”

GE Healthcare Life Sciences is a leading manufacturer of the technologies that pull the right strands out of the protein soup, the “downstream” part of biopharmaceuticals production.

Today, the GE unit completed a $1 billion acquisition of three businesses from Thermo Fisher Scientific to boost its presence in the “upstream” part of the industry. The businesses are developing and manufacturing the media and sera in which the cells grow, and aid with protein analysis and biomedical drug discovery. “Traditionally, we’ve been absent from that upstream part of the market,” Darby says. “But over the last six years we’ve acquired a number of companies that work in bioreactor technology and cell culture. If you get everything right, offering the upstream and the downstream from a single technology portfolio will enable our customers to get their drugs to the patient in a quicker and more cost effective manner.”

Darby says that biopharmaceuticals are “a very important class of molecules,” which is getting increasingly refined to hit precise targets in the body.

One new way to attack cancer has been antibody therapy, which mimics the immune system response and uses molecules precisely designed to hit cancer’s weak spots. “This is the story of increased refinement through molecular medicine, in terms of how you find targets, and the types of molecules you use to do it,” Darby says.

All of the largest pharmaceutical companies, including Pfizer, Amgen, GFK and Merck, are already working in the field, in addition to many small and medium companies. Several bestselling drugs like Abbvie’s Humira for rheumatoid arthritis and Roche’s Herceptin for breast cancer are biopharmaceuticals.

Darby is quick to stress that we should not think of biopharmaceuticals as medicines restricted to the US and European markets. “If you look today, some of the biggest sources of growth we see both in use and manufacturing of pharmaceuticals and vaccines is in places like India, Korea, and China,” Darby says.

“There is a lot of vibrancy in terms of demand for these products from the growth markets. This correlates with the best growth opportunities.”

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Bill Nye “The Science Guy” Hosts StarTalk Live, Judges Quirky Ideas at SXSW

Astrophysicist Neil deGrasse Tyson was in Austin, TX, on Saturday to deliver the keynote address at the SXSW Interactive festival. He was also launching Cosmos, a big-budget science show that turned him into an international celebrity last night.

Elsewehere in Austin, Tyson’s good friend Bill Nye the Science Guy hosted Quirky and GE’s “Night of Invention,” featuring a special SXSW edition of  StartTalk Live with an invention evaluation session.

Quirky is an open design community where anyone can submit product ideas. Members can vote for best products and influence each other’s designs.

The StarTalk lineup brought together Nye, Quirky CEO Ben Kaufman, GE scientist Balajee Kanna, and comedians Eugene Mirman and Jenny Slate. The guests covered everything from using patents as “an encyclopedia of how the world works” and letting people build on the ideas of others to building robot factories in space.

Quirky’s Kaufman ran an invention evaluation session where judges, including Nye, and the audience, could decide whether gadgets such as a robotic snow plow, self-cleaning toilet, or bluetooth enabled safe should be made into commercial products.

Nye said science and the tech startups, like those that flock to Austin, were intimately connected. “All these startups are going to be based on technologies that depend on our discoveries in science,” Nye told TechCrunch. “As they say, engineers – and I am an engineer, with a license – we use science to make things and solve problems. Everything you can see in your world came out of somebody’s head. And most of the people whose heads it came out of were engineers.”

Astrophysicist Neil deGrasse Tyson was in Austin, TX, on Saturday to deliver the keynote address at the SXSW Interactive festival. He was also launching Cosmos, a big-budget science show that turned him into an international celebrity last night.

Elsewehere in Austin, Tyson’s good friend Bill Nye the Science Guy hosted Quirky and GE’s “Night of Invention,” featuring a special SXSW edition of  StartTalk Live with an invention evaluation session.

Quirky is an open design community where anyone can submit product ideas. Members can vote for best products and influence each other’s designs.

The StarTalk lineup brought together Nye, Quirky CEO Ben Kaufman, GE scientist Balajee Kanna, and comedians Eugene Mirman and Jenny Slate. The guests covered everything from using patents as “an encyclopedia of how the world works” and letting people build on the ideas of others to building robot factories in space.

Quirky’s Kaufman ran an invention evaluation session where judges, including Nye, and the audience, could decide whether gadgets such as a robotic snow plow, self-cleaning toilet, or bluetooth enabled safe should be made into commercial products.

Nye said science and the tech startups, like those that flock to Austin, were intimately connected. “All these startups are going to be based on technologies that depend on our discoveries in science,” Nye told TechCrunch. “As they say, engineers – and I am an engineer, with a license – we use science to make things and solve problems. Everything you can see in your world came out of somebody’s head. And most of the people whose heads it came out of were engineers.”

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On an eerily balmy first day of winter last December, when the temperature hit record 71 degrees Fahrenheit in New York City, Tim Grob steered his black electric Tesla S sedan into the parking lot of Brooklyn’s new Whole Foods supermarket. He parked next to a towering green Sanya Skypump and...

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The Biggest Startup: Eric Ries and GE Team Up to Transform Manufacturing

Lean manufacturing, the idea that companies create more value with fewer resources, has been driving productivity for decades. But what if you are efficient at making something that nobody wants? “That’s what happened to most of the startups I’ve built,” says Eric Ries, entrepreneur and author of bestseller The Lean Startup. “Most of them failed.”

The first that did not was the social entertainment network IMVU. Ries’ quest to find out why led to the Lean Startup movement that is revolutionizing how businesses are launched and managed. “What creates value for a startup is learning if we are on path to a sustainable business,” Ries says. He says that successful companies have to “make that shift in perspective, from making stuff to learning which stuff to make.”

The Lean Startup approach does not mean that you have to think small. GE, a global industrial leader with 300,000 employees and $147 billion in revenues, has been in business for more than 130 years. Started by Thomas Edison, the company has historically embraced innovation and new business ideas to remain competitive in the rapidly shifting global market. To advance that goal, GE is now transforming its culture to be leaner, faster and closer to customers.

Eric Ries trained 80 Lean Startup coaches exclusively dedicated to GE’s FastWorks. Together they exposed almost 1,000 GE executives to Lean Startup principles.

Over the past year, GE has been working with Ries to develop FastWorks, a program built on his Lean Startup principles. As the name implies, FastWorks combines a set of tools and behaviors designed to deliver better outcomes for customers faster. “It will harness our entrepreneurial spirit and improve the way we work,” says Steve Liguori, GE’s executive director for global innovation and new models.

The 

 program has the backing of top GE management, including Chairman and CEO Jeffrey Immelt and Chief Marketing Officer Beth Comstock. They saw an opportunity to take many of the aspects of the Lean Startup movement and apply them inside the company. “I tell all of our managers to read The Lean Startup,” Immelt says.

GE executive development leader Janice Semper says that through FastWorks, GE was “creating a culture where we operate faster while delivering better outcomes. At the heart of it is the discipline of testing and learning that permeates the entire the organization,” she says.

In the first year, Ries trained 80 coaches exclusively dedicated to FastWorks. Together they exposed almost 1,000 GE executives to Lean Startup principles. GE also launched 100 FastWorks projects in US, Europe, China, Russia and Latin America. They range from building disruptive healthcare solutions to designing new gas turbines. GE plans to expand the program to 5,000 executives and launch hundreds of new projects next year. “GE is an ideal laboratory for applying lean practices because of its scale,” Ries says. “This is undoubtedly the largest deployment of Lean Startup ideas in the world.”

GE Energy Management executive Jeff Schnitzer, for example, is already building a startup inside GE focused on entering large energy markets dominated by established players with a small team and limited funding. “We’ve learned from Eric and started building ‘minimally viable products’ to solve quickly customer needs,” Schnitzer says. “We needed a disruptive, transformational and meaningful solution that included some very substantial ‘pivots.’”

Pivot is a Ries’ term that he borrowed from basketball, and one of the most crucial aspects of lean management. It describes a special kind of change designed to test a new fundamental hypothesis about a product or strategy.

Ries and Liguori will be speaking at the Lean Startup Conference at the Masonic Theater in San Francisco, later today. Their panel, called “The Biggest Implementation of Lean Startup on Earth,” will include GE executives with hands-on FastWorks experience like Schnitzer. Says Liguori: “Part of our leadership culture means always tapping leading thinkers like Eric and the most cutting-edge practices.”

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President Reagan Commended GE Employees for Secret Spy Satellite Work, Declassified Documents Show

In September 2011, the world at large learned that some 250 GE engineers and manufacturing workers were honored by a U.S. president. That president was Ronald Reagan and his presidential commendation took place 27 years ago, in August 1984.

The reason for the delay was the workers’s top-secret mission, which was only just declassified: they were building key components of Cold War-era spy satellites, the Gambit and the Hexagon. “I’ve been waiting for this to happen,” says retired engineer Fran Smith.

Smith, an Air Force veteran, spent 33 years with GE, including 19 years working on the satellite program. He said that on occasion he “had to travel incognito. My wife would think that I went to one place, but I would be somewhere else.” Smith recalled that “it was difficult at first to not to be able to talk about our job, especially with close family, but people eventually got used to it and so did we.”

The spy satellite programs ran from 1963 to 1986. The Hexagon was one of the largest spy satellites ever built. It was the size of a tractor trailer, 10 feet in diameter and 55 feet in length.

Top image: The assembly of the massive KH-9 Hexagon satellite. Above: Hexagon’s re-entry vehicle.

GE designed and built recovery vehicles for the satellites, command systems, mission planning software and other systems critical for the mission. The recovery vehicle for example was designed to bring safely to Earth the satellite’s precious cargo: the exposed film. This was still during the dawn of digital communications and the era when images can be beamed from space wirelessly.

The engineers were working with the cutting edge technology of the time: transistors, diodes, and capacitors. Smith recalls that his top-notch memory system could store 1000 words holding 40 bits of data. Today, a simple memory stick can hold gigabytes of data.

Still, they succeeded. In 1984, President Reagan commended all of the contractors who worked on the satellite programs. He stated that “a generation of this Nation’s youth has grown up unaware that, in large measure, their security was ensured by the dedicated work of your employees. National security interests prohibit me from rewarding you with the public recognition which you so richly deserve.” The president stated that “the technologies we now take for granted had to be invented, adapted and refined to meet the Nation’s highest intelligence information needs while exploring the unknown and hostile medium of space.”

Although the Gambit and the Hexagon programs have been declassified, the photographs the satellites took are still secret. The National Reconnaissance Office stated that the programs gathered “highly detailed imagery of sensitive targets, and became a major source of information for photo analysts during the Cold War.” The NRO also said that the satellites served as “primary means for verifying Soviet compliance” with nuclear arms control agreements.

Says Smith: “I feel that because of these systems we were able to win the cold war.”

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In addition to being Breast Cancer Awareness Month, this October is the tenth anniversary of digital mammography, a technology introduced by GE Healthcare in 1999. Similar to digital photography,...

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GE Energy just announced that its Jenbacher biogas engines have begun powering China’s largest chicken waste biogas-energy plant. The plant features a digester system that consumes 300 tons of...

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GE Transportation just announced that Mongolian Railways has taken delivery and completed testing of its first Evolution Series Locomotive — which was produced at GE Transportation’s Erie,...

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Today, Harvard Business Review published “How GE is Disrupting Itself,” which dives into the radical way in which GE is using what the company calls “reverse innovation” to rapidly accelerate...

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In Part 1 of our series on “reverse innovation,” Dartmouth professor Vijay Govindarajan explained how GE is literally reversing its traditional business model — which is the subject of the...

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GE Reports has recently focused on the way in which loans from GE Capital are making a real impact when it comes to communities and jobs — from helping Boscov’s Department stores exit bankruptcy...

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Arc flashes — which are electrical discharges that can explode from one high voltage source to a nearby conductor — can reach temperatures as high as 35,000 degrees Fahrenheit. The bright fireballs...

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Lately ILCs — or “industrial loan companies” — have been in the news, finding themselves unnecessarily drawn into debates about reforms that are needed in the wake of the global financial crisis....

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Contributor Vivek Kemp is GE’s Reporter at Large

Today, GE’s Global Research Centers in Niskayuna, NY; Munich; Bangalore and Shanghai are kicking off their annual “TECHfest” celebrations in...