The Business Year

Raúl Gallegos

MEXICO - Energy & Mining

Healthy Glow

President & CEO, General Electric Mexico


Raúl Gallegos has been President and CEO of General Electric (GE) Mexico since July 2013. He began his career at GE 16 years ago in Connecticut, returning to Mexico in 1999 to work in the real estate business. He has a degree in Civil Engineering from the Universidad Anahuac and an MBA from Columbia University in New York. He began his career at Gar-Vel Industries, one of the largest mechanical contractors in Mexico, where he managed major construction projects across the country.

"A major factor is innovation and our continued investment in R&D, which has been central to all GE operations."

Could you describe your new facility in Santa Catarina, Nuevo Leon?

The facility is a wind farm, a result of a joint effort made by Comexhidro Viento, Next Energy de México, and Conduit Capital, which, by using GE’s latest technology, will benefit several municipalities surrounding Nuevo Leon. It will allow the districts to reduce the cost of electricity, while reducing pollution levels in the area. We have eight wind turbines of 2.75 MW, totaling 22 MW overall. The wind farm opened in June of 2013, and the performance to date has been impressive. However, its main impact will be seen in the reduction of the rates and tariffs that municipalities pay for public electricity.

Is GE embracing wind energy on a wider scale?

Mexico already has a solid framework for renewables, and we are certainly looking to participate more in this field and grow our business in it. And of course, any such undertaking would also need to complement our national energy resources portfolio. Certain areas are clearly more suited to the exploitation of wind energy, and we will continue to expand our operations there.

“A major factor is innovation and our continued investment in R&D, which has been central to all GE operations.”

Was it a challenge to develop local talented players for your Queretaro engineering center?

We are very proud of this center, where most of the engineers are working on turbines used in aviation and energy generation. They produce very high-quality work, and some extremely advanced aircraft components are being designed there, enabling us now to look into avionics. We are also looking to support the development of local engineering solutions for the oil and gas industry. Our cadre of around 1,700 engineers is expanding, possibly to over 2,200 people. Developing talent is key to the center’s operations, and we have been fortunate in attracting local talent. We have teamed up with institutions to ensure we continue to do so. We enjoy a fruitful relationship with all the major technical universities in support of future talent and create further scholarships and programs for individual development. In fact, the first master class of aeronautical engineers graduated in 2012. Certain other companies undertake similar efforts in Queretaro, where the transformation observed has been amazing. This has already had an effect on the automotive industry, the supply chain for appliances, and the aerospace industry, and, as you know, there is a full cluster of aeronautical companies.

What is the significance of Mexico for your company?

We have long been committed to Mexico, which was home to our first plant established outside of the US. We have 18 manufacturing plants here, some of which are the most efficient of their kind in the world. The healthcare plant in Juárez has been the best in the world for the past two or three years. Most plants are geared toward exports, and so we are looking at ways to dedicate more capacity to products that are sold in Mexico itself. We continue to invest and introduce new lines, and if the oil and gas industry continues to grow it could provide an opportunity for us to support the key players in Mexico’s energy production.

What are the reasons behind your impressive growth?

A major factor is innovation and our continued investment in R&D, which has been central to all GE operations. Therefore, even in tougher times, we have an unflagging commitment to continued investment in all areas of our business. We continue to evolve our projects in the process making them more energy efficient. GE positions its portfolio of businesses by responding to global demands for infrastructure. We consistently invest in talent, regardless of the economic climate. And where necessary we export some of this talent, and there are certain leadership programs where you can observe the practice.

What percentage of your income do you allocate to innovation and what is your attitude toward energy-efficiency programs?

We allocate a huge 6% of our revenues to innovation, and spend over $1 billion on leadership programs in pursuit of excellence. Moreover, every product we produce aims for greater energy efficiency. For example, the new aircraft engines that we’re looking at are 20%-30% more fuel efficient than previous models. We also focus heavily on the efficient use of data storage, and bear in mind that in the aeronautics industry an increase in efficiency of just 1% fuel savings in aviation could yield more than $30 billion in savings. Right now we are launching a new wind turbine of 2.2 MW, instead of the 1.7 MW design traditionally used, which proves that you can get more from the same coverage.

What is the contribution of Mexico to your turnover for 2013?

We measure ourselves more on orders and revenue than on net income figures by country. Latin America is a growth region for GE, and we hope to build on this. In Mexico we should achieve double-digit growth for 2013, and I expect 2014 to be the same. The target for growth regions is usually two to three times that of the overall economy, and we certainly expect this from Mexico going forward. Depending on how national reforms shape up, we view this positively, and if we are able to generate a further 1.5% GDP growth from those reforms, we should see it in our own numbers.

Are you positive about the impact of the reforms?

We think that in general the impact should be positive; however, we still have to explore the details, in particular with regard to energy reform. Secondary laws will explain just how this will all work. Without doubt there are tremendous opportunities to be reaped from the energy sector. And so combining all of the reforms together is positive in general, and should benefit growth, promote investment, and create jobs.

What is your outlook for the country and your company?

For 2014-2015 we foresee gradual growth linked to that of the economy. Thereafter, should the reforms pan out as required we could see a minor increase in performance. If some of the larger projects in the energy arena materialize, we could increase our growth faster in the medium term. For the short term we anticipate moderate growth. We view these things in a couple of ways. We would have a stronger competitive position given the availability of better energy. We are very committed to the country and to leveraging some of the expertise and best practices we have used here in other countries as we engage with new industries, such as oil and gas. In deep-water exploration, too, we have expertise in other parts of the world that could be brought to support our customers in Mexico.

© The Business Year – March 2014



You may also be interested in...


MEXICO - Finance

Marco Antonio Soto


Managing Director, Abanca Mexico


MEXICO - Finance

Julio Escandón


Managing Director, Grupo Financiero Base


MEXICO - Finance

Miguel Marcos


Regional Commercial Director (LATAM), Exness

View All interviews