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Exponential Breakouts … platforms for future GE businesses

WOW

What - General Electric Company (NYSE:GE) - Bank of America Merrill Lynch Global Industrials & EU Autos Conference - March 21, 2017 11:25 AM ET

The information at GE's Investor Relations - Bank of America Merrill Lynch Global Industrials & EU Autos Conference- March 21, 2017

I didn't see the transcript there. They usually post it at some point.

seekingalpha.com has the transcript available - General Electric (GE) Presents at Bank of America Merrill Lynch Global Industrials & EU Autos Conference (Transcript) - Mar. 21, 2017

Sixteen uses of the words "additive" and "3D printing". Excerpts below. Arcam is mentioned once by name, Concept Laser is not mentioned.

General Electric Company (NYSE:GE)
Bank of America Merrill Lynch Global Industrials & EU Autos Conference
March 21, 2017 11:25 AM ET
Executives
Victor Abate - Chief Technology Officer
Analysts
Unidentified Company Representative
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Victor Abate

And then the concept of exponential breakouts. These are breakouts that technologies that you may or may not be in that are moving, that are all together should result in a very disruptive move like additive manufacturing for example. Additive manufacturing, you have lasers; you have materials; you have software. Those come together in a box that now is a whole new industry that we can use to disrupt. But how do we use speed, really the speed of adoption as a differentiator for the Company.
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Victor Abate

So, this is how, when you look at the investments here, take a checkmark that’s bold. That’s where you start. Everybody else gets it for free. So, across the Company, because these businesses rely on the same horizontal platforms in many cases to differentiate, this is how we can invest at one-fifth or one-tenth the cost and get 10 times the probability that’s going to get adopted across the product lines and across the company. Okay? That’s how we think about deploying capital in an efficient way.

And then, just lastly here on exponential breakouts. So, platforms for future GE businesses. And what are we talking about? We’re talking about technologies that are moving exponentially down on cost or up on performance, giving engineers and designers more degrees of freedom. And the best example of that today in my opinion is additive. When you look at additive, the exciting thing about additive is, it’s not just about making about making apart the way you used to make a part. And when companies will talk to you about, well additive cost more, that’s because if you’re doing the same thing, you’re doing traditionally. That very well could be the case. But what we’re seeing is in cases like aviation, 17 parts are now made in one, or in some cases a 100 parts collapse down to three.

So, this is where because of the degrees of freedom to design dramatically changed. And where does that come from? If you look at what’s happened with lasers, materials, system design, software; it’s completely transformed our ability to take very exotic materials and use them in completely different way.

One other point on additive. When you’re in the turbo machinery industry like we’re, moving air is the key. And more air you move, that’s like the equipment is breathing and that’s how you get power. And doing that efficiently, when you actually look at what the designers want to do, all those parts look very artistic. They’re very three dimensional, their shapes are very smooth because that’s how air wants to move more efficiently. Manufacturing that is actually very hard to do. And so the manufacturing teams that often push back, they say, hey, can I make it look more like a 2x4, because that’s an easiest thing I want to make and you sort of meet in the middle. With additive that barrier is gone. You just program it in a software machine and it makes particle by particle any shape you want. That’s the beauty of that breakthrough. So, it’s the engineer plus the manufacturing and designing.
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Victor Abate

I think one that we’re extremely excited about and just the more we think about it, the more we question even are we thinking big enough. Because what it can be is additive. When we look at additive, and again I find -- some groups you talk to, if you try to do what you know, what you’ve been doing already, you’re probably going to feel it’s not that big of an idea. The thing that got me was I went to our aviation business and we took a group of about half a dozen very early career engineers that didn’t have much tribal knowledge, naïve, if you will, in a lot of ways, and gave them an auxiliary power unit, and said go see what you can do. And I think in a week they 3D printed it. So, if you would actually taken that and given it sort of the old fashion way, it would have been, one part I’ll try; another part I’ll try. They just did the whole thing. And so, what David and Mohammad and the team have done, is they’ve launched tiger teams across the Company, again, not scale but around strategy and the idea, about eight people. And in every one of those businesses I showed you, they’re doing that exact exercise in those businesses. So, right now, there is about 17 parts that are shipping across the Company. We’ve got examples where we could see that getting into the hundreds very quickly, and if not the thousands. So, we see tremendous cost productivity on the GE side, number one.

Number two, we’ve got our customers with very elegant heat exchangers, things like that, asking us to manufacture them for them. When we look at our radiator, your geometry is fixed, the issues with the manufacturing can be fixed. And with 3D printing all of that gets re-imagined whole new way. So, you can see cases where the weight is down, the aspect ratios are changed dramatically, transfer coefficients are changing dramatically and all the sudden an automobile can begin to look different or on an airplane different subsystems can begin to look different.

Unidentified Analyst

And I think you gave some great examples when you were speaking about 100 parts becoming 3 and sort of much more organic designs that perhaps no one ever thought of before. Where are the regulators on this? Of course the aerospace, you’ve got the FAA, and if you take healthcare, the FDA, where are the people who I guess dictate what things can be on this 3D printing technology?

Victor Abate

We have parts flying now. So, in that regard, we’ve been through that process. So, one of the companies Arcam has in the healthcare industry as well. So, I think the adoption of this is really no different than what it would take with other approaches, and others testing, and there is a way to certify. I think what it really is, just sort of looking at the tail end of the process, I’d go back upstream to the idea, the imagination; that’s the part. And now you can also start to see engineering as a service.

You can start to see an application engineering team from GE transforming an industrial company, not only in the digital world of Predix and information but also with materials and additive machine. So, this whole concept is -- comes full circle.
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Unidentified Analyst

And you talked a lot about some next generation technological developments, which probably not that many companies can do, who have the firepower, the developments that GE does. How this impacts supply chain? Because I guess if you look back, you have I guess companies such as GE used supply chain that supply simple components and you put it together through assemblies and systems et cetera. But now with this advent of new technology and additive manufacturing, does this mean you’re going to consolidate supply chain, how does that make buy equation?

Victor Abate

It’s a great question. Completely, I think there’s a tremendous amount of disruption in the supply chain. And what this does is now additive can lower -- if I can take ten parts that are made, and now make it out of one that is 30% cheaper, the only way I keep it the old way is that old way has to be 35% cheaper. And then, you could argue is it is quality, is the simplicity what I just described. So, this is a way that clearly drives productivity. And I think in these industries that’s what we do, right. As an infrastructure company, our job is how do you light the dining table more cost-effectively for our kids than we have? How do you -- and with a cleaner impact on the environment. How do you get from here to LA, less expensively for our kids than we do? And that’s really the journey we’re on. In healthcare, how do you healthcare more cost-effectively. And so, this is how we have to lead these industries forward, and the supply chain. We’re part of the supply chain for our customers. We have suppliers that feed us. And they are constantly going to move those boundaries based on technology. And we believe if we can see those trends and identify them clearer and connect the dots sooner, we can be better positioned for our shareholders as these ecosystems transform.

Unidentified Company Representative

Vic, great to have you here today. Some fascinating answers to some very intriguing questions. Thank you for your time. Thank you.

Victor Abate

Excellent. Mark, thank you. I appreciate it.