The oil and gas business is notoriously cyclical. Everyone in the industry knows that. It is a challenge to look past the downturn and plan for the upturn, but that is precisely what smart companies are doing. While some companies are cutting back on investment and reducing their workforce, there are others that are turning adversity to advantage. No doubt, there are opportunities in a downturn, and many companies are still pursuing their long-term investment plans, even in the face of a dire international investment climate. The message at the GE Oil & Gas annual meeting in Florence, Italy, was that GE Oil & Gas will be one of the companies that moves forward with its plans. “The economic crisis is impacting our industry. There is no doubt about it,” said Claudi Santiago, GE Oil & Gas president and CEO. But the uncertainties and unknowns are not significantly impacting the company’s plans. “Our strategy remains intact. We are going to stay on course.” In fact, the company plans to grown in 2009. “We believe the fundamentals of the industry are very strong, very robust,” Santiago said. “They are as robust as they ever have been.” Increasing demand in emerging markets is one of the drivers for the industry, and the primary fuel, particularly for power generation will be gas, Santiago said. Though renewables will play a role, and nuclear energy will make up a larger part of power generation in time, gas will be the most important fuel in the near term. So the company will stick to its strategy. That strategy, Santiago said, is based on three pillars. The first is to create relationships that allow the company to be as close as possible to customers around the world. To that end, GE Oil & Gas is globalizing to create intimate relationships with its customers. New service shops are under construction, and plant expansions are planned. Between US $150 and $200 million will be spent each year for the coming few years on expansion. The second company objective is to differentiate itself through technology and innovation. GE Oil & Gas is investing $0.5 billion in R&D over the next three years. And total company investment across all business lines will be $5 billion over the next10 years, Santiago said. The third pillar is partnering. The goal, according to Santiago, is “to be a reliable partner with our customers.” GE has several business units in addition to oil and gas, and access to those units gives the company an advantage. Advances in composite materials from the aviation arm, for example, are being applied to riser technology in the oil and gas division. And technology from health care is being applied to downhole sensor equipment. “This is like going to different GE stores,” Santiago said. No doubt, “shopping” for technology is one of the advantages of being a part of a much larger organization. The bottom line is that GE Oil & Gas is using the downturn to lay the groundwork for expansion. “We expect to grow the business in ’09,” Santiago said, noting that more acquisitions also could be in the works. The company is looking beyond the immediate to achieve its longer term goals. “The decisions we are starting to take in the next 60 to 90 days will have more impact in 2010 than in 2009,” he said. With all of the doom and gloom predictions about near-term and medium-term investment coming from financial analysts, it is easy to take a dim view of the future of our industry. The fact is, though, that there are many companies like GE Oil & Gas that are doing business as usual, strengthening relationships with customers, investing in R&D, and building capacity so that when the inevitable up cycle occurs (which could be sooner than predictions imply), they will be in a position to capitalize on improved economics.