GE Investing Millions in China, Brazil

GE (NYSE: GE) made separate announcements concerning multi-million dollar investments in Brazil and China, some of which will go toward clean energy, electric transportation and smart grid development.

CHINA

GE and State Grid Corporation of China (SGCC)–China’s top power distributor and one of the world’s largest utilities–announced plans for several joint ventures to address China’s growing energy needs and to electrify its vast transportation infrastructure. These joint ventures are part of GE’s plans to invest US$2B in China through 2012, and are expected to play a role in supporting the country’s energy demand through the development of a smarter power grid.

“Currently, China is experiencing one of the largest rural to urban migrations in history and is expected to become a predominantly urban society by 2020, when urbanization rates reach at least 50 percent,” said Dan Heintzelman, president and CEO, GE Energy Services. “This shift means significant changes to the electric distribution needs for a country boasting one of the world’s largest populations. Doing this in a sustainable manner will be a challenge we will help provide solutions for,” Heintzelman said.

GE has signed two joint venture agreements with SGCC. GE will work with Wuhan Nari, a subsidiary of SGCC, to improve the efficiency and reliability of China’s electric grid by developing and implementing asset optimization technology solutions.

GE also will work with Electric Power of Shanghai (EPS), controlled by SGCC, to jointly acquire a 77.5% controlling stake in Shanghai Tianling Switchgear Co., a Shanghai-based company developing and selling green power distribution equipment. This acquisition by GE and Shanghai Grid is meant to reposition Tianling competitively in US$10 billion global medium-voltage switchgear industry.

The venture with Wuhan Nari follows GE’s work with the city of Yangzhou in April of this year to launch the first government-sponsored smart grid demonstration center in China.

“To support current energy needs and future growth, China is rapidly expanding its use of renewable energy sources, which rely heavily on smart grid technologies to optimize their effectiveness,” said Hai-An Zhu, general manager–digital energy in China for GE Energy Services. “These solutions will provide the region with a new supply of additional power, helping minimize the need for large investment in transmission networks while improving reliability and reducing pollution.”

Tianling switchgear holds a competitive position in the industry. With China’s increasing environmental awareness, this competitive position will support GE’s growth plans both within China and Global IEC markets. The two primary products manufactured by Tianling are cubicle gas insulated switchgear and ring main unit switchgear.

“China is the world’s largest market for infrastructure projects, and medium voltage switchgear is one of the most critical components in building that infrastructure,” said Luis Manuel Ramírez, vice president, GE Energy, Industrial Solutions. “This joint venture with EPS will expand our portfolio and presence in China with the best products and people needed to support the tremendous growth of Chinese infrastructure projects.”

BRAZIL

GE plans to invest $500 million to expand its operations in Brazil and to accelerate technology partnerships with Brazilian companies spanning multiple industries. The announcement was made this morning at a news conference in Rio de Janeiro, which was chosen as the home for GE’s newest multi-disciplinary Research and Development Center.

The $100 million Brazil Global Research Center will be located on the Ilha do Bom Jesus peninsula and, when fully operational, will employ 200 researchers and engineers. Work at the center will focus on advanced technologies for the oil & gas, renewable energy, mining, rail and aviation industries.

GE has had a presence in Brazil since 1919 and, today, employs more than 6,000 people in the country. The company has operations throughout the country, including São Paulo, Minas Gerais and Rio de Janeiro.

In addition to the new research center, GE plans to invest $400 million over the next three years in technology, training, new product development, new plant and equipment and human capital, including:

• $200 million for new wind turbine and aeroderivative product developments and increased plant capacity for GE’s Energy and Oil & Gas business
• Capacity expansions and new production facilities for GE’s Healthcare and Transportation, businesses both in Contagem, Minas Gerais; GE Aviation in Petrópolis, Rio de Janeiro State and GE’s Lighting businesses in a yet to be determined location, totaling $200 million
• $50 million for training and development and the creation of a Global Learning Center to be collocated with the new Brazil GE Global Research Center
• The creation of 1,000 new GE jobs, spanning all of the company’s businesses
• Development of new suppliers and partners for more localized production capabilities