GE 2002 Annual Report Download - page 14
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Please find page 14 of the 2002 GE annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.GE 2002 ANNUAL REPORT 13
worked with the aviation industry to expand the design
and the range of our capabilities, and we worked with
local technology groups to brand our engines. And we
brought local leaders to Crotonville to participate in our
leadership training programs. By acting as one GE—
not just as an aircraft engine supplier — we secured an
important point of leverage in a growing market. As a
result, Plastics, Medical, Engines and Power are each
heading toward $1 billion in revenue in China.
At the same time, we are building our sourcing
capability. We will open the Shanghai Global Research
Center in May, which will speed our sourcing qualifica-
tion process. Our Consumer Products business will
have 25% of its sourcing based in China by 2005, which
will transform its cost base. And we are designing
and manufacturing technical products like magnetic res-
onance (MR) and computed tomography (CT) devices
in China. Keep in mind, $5 billion in sourcing from
China generates $1 billion in cost savings for GE.
EUROPE: SMALL WHERE WE SHOULD BE BIG
We also believe it is a good time for GE in Europe.
Europe is a big market going through significant
changes of enlargement and conversion. The market
is growing slowly, but GE has a massive opportunity
there because we are small where we should be big.
We have half the market share in Europe that we have
in the U.S. We believe that the combination of market
enlargement and regulatory convergence will help us
drive a more profitable future in Europe.
Our European Consumer Finance business is a
great example of what is possible. This business oper-
ates in 17 countries, with 11 , 50 0 people. In five years,
we have gone from nothing to $700 million in earnings
in Europe, through great marketing and business
development. We are a local company with global
strength and limitless growth opportunity.
RESOURCE REALLOCATION
We are allocating capital to new businesses that will
increase growth with high returns. We like global mar-
kets where we can build technical leadership, interface
directly with customers and develop multiple ways to
make money. We favor businesses that require “human
capital” (engineers, salespeople, risk managers) as
opposed to “physical capital” (factories).
We have broad technical expertise and a huge
installed base in important parts of a hospital — radiol-
ogy, cardiology, and surgery. Our technology can improve
patient treatment, which makes hospitals more prof-
itable. Through our healthcare services agreements,
we are the hospital’s productivity partner. We completed
more than 4,000 Six Sigma projects with healthcare
providers in 2002, and these projects are improving
the quality of patient care and lowering costs. We have
clinical information technology that addresses our hos-
pital customers’ digital needs. We created a Healthcare
Financial Services business in 2002 to solve customers’
financing problems across a variety of platforms.
Because of this depth and diversity, we can sit in a
CEO’s office or with a radiology technician and help
a hospital create a better future.
The phrase “solutions provider” is so overused, it
makes us all snore. I want GE to be essential to those
whom we serve …a critical part of the profit equation…
a long-term partner…a friend.
GLOBALIZATION
Globalization multiplies growth by taking our capabilities
everywhere. Global strategies also create faster growth
and reduce costs by distributing market and engineering
resources. We believe that the two most important mar-
kets for GE in the next few years are China and Europe.
5 X 5 IN CHINA
People talk about China as either an opportunity or a
threat. The most successful China strategy is to capital-
ize on its market growth while exporting its deflationary
power. We have a vision for China: $5 billion in revenue
and $5 billion in sourcing — “5 x 5”— by 2005.
Four of our businesses have built service and
production capabilities in China. Plastics has as many
salespeople in China as it does in the U.S. We are
playing there as one GE, meaning that our business
diversity makes us a perfect partner for a large country
like China and its complex infrastructure needs.
Our CF34®engine was selected as the sole choice
for China’s regional jet program, which ensures that GE
will have a lead position in the Chinese aviation market
when the jet (the ARJ21) is ready to fly in 2007.We
accomplished this by partnering with key constituents
across China and the U.S. to develop our solution. We