General Electric Co. (IW 500/6) agreed to participate in as much as $3 billion of investments across industries in Saudi Arabia as the desert kingdom seeks to diversify its economy away from oil.
The U.S. manufacturing giant will collaborate with the Saudi Arabian Industrial Investments Company to pump $1 billion into the local market by the end of next year, GE said Monday in a statement. That could be followed by another $2 billion invested in water, energy, aviation and digital projects in subsequent years, the company said. SAIIC is a joint venture that includes Saudi Arabian Oil Co., or Aramco.
The agreement, announced as part of a visit by GE Chief Executive Officer Jeffrey Immelt, is intended to complement the recently announced “Saudi Vision 2030” plan to help the crude-rich nation diversify its economy. The project, championed by Deputy Crown Prince Mohammed bin Salman, includes selling shares in Aramco, creating the world’s biggest sovereign wealth fund and generating more than $100 billion in additional non-oil revenue by 2020.
“We will work together to build manufacturing capabilities of GE in Saudi Arabia and develop more ‘Made in Saudi’ high-tech technology, creating a robust local supply chain,” Immelt said in the statement. He called the memorandum of understanding “a game changer for the kingdom’s industrial and digital sectors.”
The move underscores the growing importance of international markets for GE, which generated more than half of sales outside the U.S. last year, according to data compiled by Bloomberg. As GE looks to strengthen its manufacturing operations and shed consumer and finance business, the company has reached recent agreements for industrial investments in countries such as Italy and India.
In a speech last week to graduates of New York University’s business school, Immelt highlighted Saudi Arabia as a market where the company plans to boost local production of goods.
GE also plans to invest $400 million in a forging and casting factory in Saudi Arabia that will help double the company’s workforce to 4,000 when it is operational in 2020, according to a separate company statement Monday.
By Deema Almashabi and Richard Clough