Already involved in a broad range of energy undertakings in Hungary, the multinational expects its acquisition of Alstom to boost its importance in the sector locally. The firm’s president in Hungary and the CEO for CEE explain more.
In announcing that it had received European Commission approval for the acquisition of French power company Alstom, General Electric suggested it was getting back to basics.
“Over the last year, GE, which makes everything from CT scanners to jet engines and power plant turbines, has been bulking up its industrial core,” according to a GE statement. “The company plans to add more big iron to its portfolio by acquiring Alstom’s businesses.”
But when you hear Joerg Bauer, president of GE Hungary, describe the firm’s activities, it sounds like they are as much about IT as iron.
“We are investing in data-driven, value-added services,” Bauer said, noting that, in Hungary alone, GE employs – directly and indirectly – roughly 1,000 programmers and IT staff, many of whom are working on developing new digital technology.
In an interview with the Budapest Business Journal, Joerg Bauer and Peter Stracar, the CEO for General Electric in Central and Eastern Europe, described how their firm is using technological advances to shape developments in energy and other fields. They also noted that GE’s pending acquisition of Alstom would help strengthen the multinational’s position as a major player in the power field in Europe. “With this deal, we would cover almost all needs in the energy sector,” Stracar said. “It is a good deal for Europe and a good deal for GE.”
Because more than 20% of the region’s GDP comes from manufacturing, Stracar said GE’s efforts to improve energy security, affordability and sustainability are vital to Central and Eastern Europe. “Most of the power grids in the region are 30-plus years old, and we have a regulatory environment that still needs to catch up,” he said. “The countries and Europe need to unify laws to open space for private investment.”
GE has obviously already found some space for investment here. One of the first American firms to come into Hungary as the Iron Curtain was falling, GE is also the largest U.S. investor in – and one of the largest exporters from – this country. Company officials say GE will be focusing more on industrial activities and getting out of peripheral areas like banking – as it did by selling Budapest Bank to the Hungarian government this summer, in line with the company’s global strategy.
Currently, GE Hungary employs more than 10,000 people working at a dozen manufacturing plants, three technology centers, three regional business headquarters and one shared services center. The firm’s activities in the country are focused on the fields of lighting, healthcare, power and water, aviation, energy management, oil and gas, and shared services.
As Bauer explained, the heavy equipment that GE manufactures here employs the “industrial internet” concept of putting sophisticated software sensors onto sophisticated hardware to create smarter machinery that can produce valuable data.
For example, Bauer said, at GE’s office at Váci Greens in Budapest, developers are working on a system that analyzes big data gathered over the years by the company’s line of sophisticated medical equipment, such as MRI scanners. Using “biomarkers that are early indicators of a disease”, they can develop algorithms that help predict a patient’s future potential for a disease and assist in diagnosis.
“We are using data to enable management of health and reduce the cost of treatment. Very often health systems nowadays use the general practitioner as a gatekeeper with improved diagnostic capabilities,” Bauer explained.
At the core of GE’s industrial internet is a company-developed platform called Predix, which allows for communication between heavy machinery and, for example, a laptop or smartphone. The platform also permits use of big data gathered from all the connected machinery, to make intelligent analysis and predictions. GE has opened up this platform, so that other firms will use it, basically turning Predix into the Windows of the industrial internet.
In the energy field, GE is using the platform to enhance renewables, by employing big data to predict wind patterns. As Stracar explained, power-generating wind turbines can be turned to face the breeze, so they will be more effective. “Improved steering in the wind parks can improve efficiency and over the course of a year, even a 1% improvement can really add up,” Stracar said.
He added that GE is also using digital technology to reduce the downtime of power grids, which is one of the best ways to improve their efficiency. He explained that better information and use of data makes it possible to use smaller power grids, even micro-grids, which can employ more renewable energy because “you move closer to the source of power”.
When it comes to ensuring a stable power grid, Bauer noted, it is also possible to use derivatives of big aircraft engines to drive portable power plants, which are being assembled in Veresegyház.
“GE Power & Water’s innovative power solutions developed and manufactured in Veresegyház give businesses and communities the ability to generate reliable, fast and efficient power using a variety of fuels anywhere, whether on or off the grid. In Israel, for example, GE Advanced Aero derivative Gas Turbine Technology is helping Israel meet its urgent power needs,” according to a statement from GE. “The technology from Hungary is also being used in Algeria and Egypt; it has helped the victims of Typhoon Haiyan; and it is being used in the recovery works following Hurricane Odile,”
Power generation through natural gas, which is the most efficient and plentiful fuel that we take out of the ground, is important for future energy production, according to Stracar. “We believe that gas will play a bigger role,” he said.
He also sees renewables increasing their importance in the near future. “You have countries in Europe that produce close to half their energy from renewable sources,” Stracar said. He noted that the biggest challenge is finding a way to save the energy produced by sun or wind, so that these sources can feed the grid with the same consistency of a fossil-fuel power plant. “The next huge breakthrough will be commercially viable energy storage,” according to Stracar.
He added that GE’s work in the field of renewable energy in Hungary is set to increase with the acquisition of Alstom, which can take advantage of Hungary’s location over thermal water reservoirs to produce thermal energy here.
“We see Alstom as very complimentary to what GE does. Alstom is very strong in water, energy and grid management,” said Stracar.
That deal, which is expected to go through by year’s end, will put GE in charge of even more iron and IT here in Hungary.