GEGP19001

John Lammas GE gas power

July 8, 2019

Respondent: Having worked in aviation, I think aviation had a very strong brand and the strong
brand, you can see an engine hanging under the wing of an airplane. It’s very clear
what it is. The problem that we’ve had in this business is we’ve not really known
what we are and that may sound strange but if you look at it, the gas turbine is the
center of the plant. Without a gas turbine, you don’t have a business. You can go
even a subset of that and say the combustion and turbine is the center of
everything so we’ve often been convoluted in what are we? Are we a
manufacturing seller of gas turbines? Okay, which is the heart of the power plant
but you need a generator. Without a generator, you have no electricity so we make
generators but then, the steam turbines [Unintelligible]. We make steam turbines
but we don’t invest much in them because the technology is very mature. There’s
not a lot you can do and then, with Alston, we acquired the HRSG business so we
can provide all the big pieces of equipment but do we design plants? We can. We
have. We’ve preferred to sell gas turbines only. Then, we’ve only sold steam
turbines if we have to. Occasionally, we’ve done a whole plant if the customer
insists but we really don’t want to be so if you are a plant engineer, where are you
with respect to this. If you are a steam turbine engineer, even within the gas
business, what are you? We could stand back and say, from now on, we’re just
going to sell gas turbines and forget everything else. We can buy all of that
somewhere else. Is that our future? Is our future that we provide all of the core
equipment which is probably the right place to be? When you get into big projects
and executing plans in faraway places like in Pakistan – I’ve had the opportunity to
go there quite a few times. Do we really want to be building plants in Pakistan?
Who are we? That has been very confusing. We always trend towards being gas
turbines. We measure the business in the number of gas turbines we ship. If you
worked in steam turbine or generator, you hardly ever get mentioned. We never
say how many steam turbines we sell a year. We sell a steam turbine if we have to
but it probably is diluted to the overall percentage margin you get on the deal
because that lower margin combined with the gas turbines so what are we? Even
today, we’ve got a large plant team in Switzerland that we acquired through Alston

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 but we’re actually reducing the number of bids we put out on the turnkey self-
implement projects they work on because the risk is high and we don’t make a lot
of money doing it so what are we going to be. From a different person and
different technology area, it’s all very different, right?

Interviewer: Yes.

Respondent: Definitely, the value comes from the gas turbine itself and then, we’ve got a lot of
people who put accessory systems around. How do you make it this inclusive world
but to be inclusive, you almost got to say what you are and I don’t know if the
business truly knows because if you go back 20 years ago, we were just selling
equipment generally and making lots of money. Now, we do plants and we’ve got
project risks and et cetera et cetera. I think when we acquired Alston, those huge
celebrations around this great plant capability we’re going to get but now, we
don’t really want to do it because the projects and risky and partners go out of
business and we lose lots of money.

Interviewer: Yes, that’s tricky. I’m sure, to your point, that the perspective of people across the
business in terms of who are we and what we should be is different so this
conversation is [Unintelligible] at the right time.

Respondent: Yes, I think just having a gas business will help at the highest level but, then the
gas business has boomed. We bought an HRSG business, the heat recovery steam
generator business when we got Alston. Then, we bought another one off [Duzon]
and people are scratching their heads and going like “Why the hell did we buy
this?” There are 10 other people in the world that can make them probably
cheaper than we got. Why did we do this?

Interviewer: Yes.

Respondent: So it’s probably if you are in HRSG long and firmly. It’s like “Are they going to sell
me?”

Interviewer: Right, there’s a lot of unrest and you mentioned low morale and people questioning
how relevant the company can be and what’s coming next?

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Respondent: Yes, what are we going to be serious about in the future because it’s so broad
whereas, an aircraft engine is this thing that hangs under the wing of the plane,
right? You know exactly what it is. You know what exactly what it does. There’s
not “We’re going to make half of it.” We make an aircraft engine. We make a
working system that is very well-defined and everybody has a part in it. If you think
about it, making a power plant is more like making an airplane and you could be
the guys that make the seats that go on the inside, the guys that make the wings,
the guys that make all the bits and pieces, the kitchen equipment. How do you
make them feel all part of it?

Interviewer: So connecting people to their roles in the ultimate mission essentially what they’re
serving -

Respondent: Yes, in aviation, they’ve got their theme. I think it’s something like “We lift people
up and take them home safely” or something like that. They’ve had this theme for
years and I don’t know if it’s that easy for the gas power business.

Interviewer: Yes, it’s a - [Crosstalk]

Respondent: A few years ago, we made videos of people trekking into the Himalayas and putting
solar panels onto little villages and bringing electricity to them but the real sad
thing about some of those videos is not only do we not make solar cells, we haven’t
for years or any of the equipment they installed so it’s completely irrelevant to
what we do.

Interviewer: That was something that was shared internally and externally?

Respondent: We certainly shared internally a lot but this was in the power days. I don’t know if
it ever got external. It’s this great thing. Look at us trekking into the mountains to
bring electricity to people. I think that’s too vague and too high level. Maybe,
those were in the days when we were power and water so you have to have
something that was very general.

Interviewer: So more specificity you think is needed in terms of defining what you do and why
you do it?

Respondent: Yes.

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Interviewer: In terms of questions that we are asking all of the leaders that we’re speaking as
we’re thinking through defining a purpose, what motivates you in your job?

Respondent: The thing that motivates me is the technology itself. We’re about to run a test
here in Greenville and this is the largest most efficient gas turbine in the world
that’s ever made. We’re running this thing approaching 3,000 degrees. [You tell
them to cool the air off]. The thing melts. There’s not many people in the world
that can do this so I think it’s the complexity, the technology and the fact that we
are an industry leader that makes it very interesting to me.

Interviewer: What about people in your team? When you think about meaning to motivate the
engineers, et cetera, what are some of the things that you think are most
compelling or meaningful to them?

Respondent: I think it’s giving them value and giving them recognition. I think there’s a lot of
people think they’re commodities and we are doing some things that are very anti.
We’re going to be taking groups of engineers and outsourcing the work because
we’ve got to cut costs so I think one of the things that worry people is they’re just
a commodity. Engineering is a commodity. It isn’t really a technology business and I
think that’s somewhat demotivating to a lot of people but I think the majority of
people love the work. It’s challenging. These are very complex systems that we’ve
put together. I think people just enjoy the work. One of the jokes we’ve had and I
think we’ve had three or four rounds of layoffs here in Greenville is the people just
keep their heads down and keep working because they enjoy what they’re doing.

Interviewer: When you think of the technology and the future of where you need to go in order
to be successful as a company, what types of talent on your tour outs of your team
do you think you need to attract and retain in order to get you there?

Respondent: As I mentioned, there is a hierarchy of engineering if you want to talk about it with
gas turbine being the core of it. To do well in gas turbines, you need great
materials engineers. You need great aerodynamicists, heat transfer engineers,
mechanical design engineers and then, the control software type guys so it’s a
broad swath of different skills but all of them come together to make this complex
system work.

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Interviewer: Outside of technical skillset and more in terms of personality or attributes or vision
for the business, are there other things that you think are really important in terms
of mindset for example?

Respondent: That’s an interesting one. I think one of the challenges we got is how do you
encourage young people to come to a business and it’s the last of the fossil fuel
businesses. I’ve had roundtables with like “I’m starting my career so why should I
be here?” I think as far as your question on what mindset, I think you’d have to
have people with a belief that this is part of the future, that this is a technology
and a product that will be around for at least their careers. I think that’s the
mindset. You want people that believe that this is a strong and good business and
certainly a business that probably will outlive them or outlive their careers.

Interviewer: So to be able to understand and see the potential and the future of it.

Respondent: Yes.

Interviewer: Do you have an example of an inspiration impact story where GE gas power or the
gas industry, in general, changed people’s lives for the better. It could be
customers, consumers, employees, et cetera. You mentioned the Himalayan
example being too high level and broad. Is there one that you feel has more impact
as a story?

Respondent: I mentioned Pakistan. It was a country that we brought three large combined cycle
power plants in a very short period of time onto the grid there. They were having
power outages and power cuts. I think some of those stories certainly, in prior
years, the trailer mounted equipment has been very useful in areas of the world
where there’s been natural disasters. In Fukushima, we flew in trailer mounted
power plants to start power generation. I think the ability to bring power in large
amounts such as the Pakistan example to basically stabilize a country and then, the
ability to quickly get on line power if there have been natural disasters is very
specific to gas power and probably more powerful to our employees.

Interviewer: That makes sense. If you could describe if there are lots of times or a recent time
when you felt really excited and energized to be leading this business in this
industry, what was most exciting and energizing for you?

Respondent: I think the most energizing thing for me is when we bring new products in the
engineering world to test but then to the customer and we meet these objectives

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 that were set many years before because this is a long cycle business. Maybe, we
start a project in four or five years but to be able to deliver on the commitments
that we make I think is probably one of the most energizing. With our HA machines,
we were behind. We aggressively bid and we delivered and I think those things are
the most energizing to me. Recently, we moved the first nine HA-02 from the
factories to the test stand. We’re going to be running it in probably another week
or so for the first time. Just to see all of it come together and to see what the
team can achieve is pretty damn impressive.

Interviewer: Last question or two, it’s too bad that you won’t be able to join us tomorrow for
this workshop but thinking about what you want people to know and believe about
GE gas power in the future or even your definition of the core purpose needs to be?
I would love to hear your perspective there.

Respondent: I think that’s a very tough one really. Ultimately, a business exists to give return to
shareholders which is a certain element of it and it feels good when you do it. It
doesn’t feel very good when you don’t. I think it provides people with challenge,
an industry where you can continue to challenge people and take technology to the
next level. You create the great careers for people and the opportunities to have
great careers. I grew up in a small town in Birmingham, England. Did I ever think I
would live in the United States and see things around the world? Probably not and
GE certainly brought a career to me which I think is an important thing so this
returns to the shareholders, having a well-run profitable business. It’s creating
great careers for the employees and I think the last thing is you’ve got to produce a
product that is significant and gives value to all of our customers so I think there
are three elements of it. I’ve worked in businesses like aviation where you hit the
goal three and it feels pretty good to work there.

Interviewer: Anything else?

Respondent: Currently, we’re maybe hitting one of the three here in power and maybe not
doing that well at that.

Interviewer: Which one would you say that is?

Respondent: The way we produce the best products. We have too many quality issues but the
careers question is very open to me. There’s certainly a hell of a lot of people in

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 power that don’t feel very good or very secure so I can’t say we’re giving people
great careers and the profitability isn’t there.

Interviewer: In our last minute or two, is there anything else that you think is important for us
to know as we are working with the team tomorrow and going through this process?

Respondent: [Pause] That’s a difficult question. I think you can get bogged down by too much of
the history and there is a lot of history in the business so it’s got to be more
forward. It’s got to be directed forward rather than rehashing everything in the
past, if that makes any sense. It’s got to be more forward looking and there’s a lot
of people that don’t think we’ve done enough or we should be doing more.

Interviewer: Is that inside or outside of the company or both?

Respondent: Inside the company, we come into some bad business practices and now, we’re
paying the price for them and most of those people are gone but not everybody.
There’s still some sort of resentment with the past and that’s why I think we’ve got
to curb that and just say “What are we going to do moving forward?”

Interviewer: Excellent, John, thank you again so much for taking the time today. It was really
helpful for us and I’m sorry we won’t get to meet tomorrow but I appreciate your
part in this process and, hopefully, we’ll get to connect again soon.

Respondent: Yes, if there’s more I can do to help –

- End of Recording -

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