More Than Just Hot Air

Except during hurricane season, folks in Greenville, S.C., don't worry much about power outages. But the current energy crisis has still had an impact on many of the city's 98,000 residents. That's because Greenville is home to a bustling General Electric factory that produces gas turbines. They're a key component in powering the 1,300 new power plants the Bush administration says need to be built over the next 20 years. Just a few years ago the GE plant--the only one of its kind in the nation--was a sleepy place; even the local paper rarely gave it a mention. Now, as GE scrambles to ramp up production, its work has taken on national importance--and every extra turbine it produces will help the cause. Says Mark Little, a GE vice president: "We're going to put more units online this spring than we did all last year."

Politicians are great at generating hot air, but when it comes to generating energy, it's GE and other big companies that will do the heavy lifting. Today most U.S. electricity is still generated using coal or nuclear energy, but experts say that by 2020, 36 percent of it will come from natural gas, up from 16 percent today. That's because plants that run on natural gas are cheaper and quicker to build, cost less to operate and produce fewer emissions than other fuels. As a result, business is booming at GE Power Systems, which controls more than half the market for gas turbines. Want one of the $40 million gizmos being built in Greenville? Get in line: they're already taking orders into 2004.

While most of the country was unaware of energy shortages until the lights went out in California this year, GE workers could see it coming. In 1998, after years of slow sales, they were swamped with orders as power companies realized they lacked generating capacity. Ordering a turbine--300 tons of nickel alloy the size of a ranch house--isn't like ordering a pizza. Each unit, which can power up to 170,000 homes, takes at least 18 months to build. And as orders mounted, GE faced big backlogs. So the plant hired 600 new workers; today all 2,700 employees work feverishly to increase output.

The plant itself--the size of 10 Home Depots--is filled with enough cranes, diamond-tipped cutters and arc welders to make it the ideal setting for a Jackie Chan fight scene. To boost production, teams of workers attack snags using Six Sigma, a statistical improvement system that GE chairman Jack Welch has turned into a religion. For instance, at one machine that cuts slots into metal rotors, the blades became dull too quickly, limiting production. Could the blades be improved? Should the machine run at a different speed? By crunching data, staffers figured the cheapest fix was to change the lubricant used in the process. Savings: $600,000 a year. Hundreds of similar projects helped cut costs and increase capacity. In 1996 the plant built just 68 turbines; this year it should top 275. Says customer liaison Stuart Collins: "We've been able to get so much more out of this factory and really produce like crazy."

While energy companies clamor for more turbines, outsiders question how long these good times can last. Power companies fell in love with natural gas in part because it's cheap, but prices have doubled since last year. And the new Bush plan may renew interest in coal and nuclear power. "There are so many of these gas turbines ordered and so many plants on the [drawing board], at least half of them are probably never going to get built," says Jason Makansi, an industry consultant in St. Louis. GE execs say they'll adapt if business slows. "In no way do we think that the order volume will continue unabated," says John Rice, president of GE Power Systems. But since they've boosted production without expanding the plant, they'll be ready to handle any slowdown, he says. Until then, workers in Greenville will need all the energy they can muster.