Kingdom in Context: Manufacturing Tools for Change
Two recent reports pointing to Saudi Arabia’s strong manufacturing sector were well timed to highlight the relevance of GE’s just announced, multi-pronged investment in the Kingdom’s manufacturing sector. Before talking more about GE’s investments, let’s review the data.
A September report by Jadwa Investment said that Saudi manufacturing demonstrated robust growth in the second quarter of 2012, up nearly 7% over the same period a year earlier and following on from first-quarter manufacturing growth that was up almost 8.5%. Digging into the figures, Jadwa noted that non-oil, private-sector growth was a robust 6.4% and that such expansion puts the non-oil private sector in the lead when it comes to maintaining brisk growth for the overall economy in coming quarters.
Separately, the SABB HSBC Saudi Arabia Purchasing Managers’ Index, which measures activity in the manufacturing and services sectors, announced that the index rose to 58.3 points in August 2012 from 58.1 points in July 2012. The number also was well above the 56.3 registered in the same period a year ago.
The seasonally adjusted index remains substantially ahead of the 50-point mark, suggesting resilient business conditions in Saudi’s non-oil sector that is being buoyed by strong domestic demand.
It was in the wake of such news, that GE announced the groundbreaking on the second phase of the company’s Manufacturing Technology Center, as well as the inauguration of a new and advanced Pressure Control Facility, both based in the Eastern Province. GE also announced that it had signed a cooperation agreement with Wa’ed, Saudi Aramco’s new entity focused on financing and incubating new businesses in the Kingdom. The two parties will collaborate to identify and nurture local small and medium enterprises (SMEs) and develop them into competitive suppliers of the company in the energy sector — reflecting GE’s focus on developing a Saudi-based supply chain for the manufacturing sector.
All three initiatives are part of the company’s localization efforts designed to further strengthen manufacturing in the Kingdom. These initiatives also complement the Saudi Vision 2020 to promote local manufacturing, economic diversification, exports and job creation.
In particular, the expansion of the Dammam-based technology center will more than double its size to about 390,000 sq ft. The facility recently marked its first year of operations, and today serves more than 50 customers in the Middle East, Africa and Europe.
After the expansion of the GE Manufacturing Technology Center, this most advanced technology center of its kind will feature five key components: a modern manufacturing facility of high-end equipment for the power, water and oil & gas industries; a service and repair center for advanced turbine equipment; a training center that offers the latest technology and managerial courses for college students, field engineers and other power industry professionals throughout the region; a Repair Development Center; and a state-of-the-art high-speed balance facility.
At the facility, GE will begin manufacturing unique gas turbine systems – five of which are gas turbine skids to power the utilities sector, and one is a dresser centrifugal and PD blower that will further enhance operations of oil & gas companies. This will make GE the first company to manufacture oil & gas vibration systems in the Kingdom. The Pressure Control Facility will manufacture key equipment to support the upstream oil & gas sector and will employ more than 75 Saudi professionals, in addition to offering training programs for other young Saudis. The high-speed balance component of the Center will provide advanced repair services to the 500 GE turbines providing half the Kingdom’s power generation.
The only GE facility of its kind outside the US, the Repair Development center will develop new repair technologies with a focus on power, water and oil & gas repair development processes, thus driving localized innovation.
Through these localization efforts, GE can get closer to its customers, providing more immediate product management and engineering support, reducing cycle times for customers, and involving customers in various design and assembly processes. Direct benefits to local industry include the provision of local fabrication and machine shops, and boosting the supply chain for feeder industries.