Baker Hughes 2013 Annual Report Download - page 42

2013 Annual Report 12
and services that perform as expected and that create value for our customers, and successfully recruit, train and
retain competent personnel. Our ability to defend, maintain or increase prices for our products and services is in
part dependent on the industry’s capacity relative to customer demand, and on our ability to differentiate the value
delivered by our products and services from our competitors’ products and services.
Managing development of competitive technology and new product introductions on a forecasted schedule and
at forecasted costs can impact our financial results. Development of competing technology that accelerates the
obsolescence of any of our products or services can have a detrimental impact on our financial results.
We may be disadvantaged competitively and financially by a significant movement of exploration and
production operations to areas of the world in which we are not currently active.
The high cost or unavailability of infrastructure, materials, equipment, supplies and personnel, particularly in periods
of rapid growth, could adversely affect our ability to execute our operations on a timely basis.
Our manufacturing operations are dependent on having sufficient raw materials, component parts and
manufacturing capacity available to meet our manufacturing plans at a reasonable cost while minimizing
inventories. Our ability to effectively manage our manufacturing operations and meet these goals can have an
impact on our business, including our ability to meet our manufacturing plans and revenue goals, control costs, and
avoid shortages of raw materials and component parts. Raw materials and components of particular concern
include steel alloys (including chromium and nickel), titanium, barite, beryllium, copper, lead, tungsten carbide,
synthetic and natural diamonds, gels, sand and other proppants, printed circuit boards and other electronic
components and hydrocarbon-based chemical feed stocks. Our ability to repair or replace equipment damaged or
lost in the well can also impact our ability to service our customers. A lack of manufacturing capacity could result in
increased backlog, which may limit our ability to respond to orders with short lead times.
People are a key resource to developing, manufacturing and delivering our products and services to our
customers around the world. Our ability to manage the recruiting, training, retention and efficient usage of the
highly skilled workforce required by our plans and to manage the associated costs could impact our business. A
well-trained, motivated workforce has a positive impact on our ability to attract and retain business. Periods of rapid
growth present a challenge to us and our industry to recruit, train and retain our employees, while managing the
impact of wage inflation and potential lack of available qualified labor in the markets where we operate. Likewise,
when there is a downturn in the economy or our markets, we may have to adjust our workforce to control costs and
yet not lose our skilled and diverse workforce. Labor-related actions, including strikes, slowdowns and facility
occupations can also have a negative impact on our business.
Our business is subject to geopolitical and terrorism threats.
Geopolitical and terrorism risks continue to grow in a number of key countries where we do business.
Geopolitical and terrorism risks could lead to, among other things, a loss of our investment in the country,
impairment of the safety of our employees and impairment of our ability to conduct our operations.
Uncertainties in Venezuela have impacted our business operations.
We believe there are risks and uncertainties associated with our operations in Venezuela. We are not able to
predict how these risks and uncertainties may impact collections of accounts receivable and our ability to continue
operations. We continue to experience delays in receiving payments from our customers in Venezuela. As of
December 31, 2013, our accounts receivable in Venezuela were approximately 2% of our total accounts receivable
(net of related allowance for doubtful accounts). For the year ended December 31, 2013, revenue in Venezuela
was approximately 1% of our total consolidated revenue. In addition, our operations could be impacted by any
further devaluation of the local currency or other action of the Venezuelan government that impedes our ability to
conduct operations, which could have a material adverse effect on our results of operations.
Our business is subject to cybersecurity risks and threats.
Threats to our information technology systems associated with cybersecurity risks and cyber incidents or
attacks continue to grow. It is also possible that breaches to our systems could go unnoticed for some period of