We're not going to suck our thumbs and cry in our beer as things kind of change. You know, we want to use change as an opportunity to improve. Now tariffs can create cost challenges. We're not immune to that, certainly in the near term, but you know, even in the last five days, there's some learnings that we'll be able to use to our benefit from here.
That's Scott Strazik, CEO of GE Vernova, the energy arm of GE that spun out as its own company a year ago. Scott was initially a guest on this show last year, and I wanted to talk with him again to hear how he's managing amid the Trump administration's tariffs and the rejuggling of global trade. GE Vernova had a tremendous 2024, among the top performing stocks for the year, but Scott knows he needs to look forward, not back. We dig into real-time adjustments and steadfast convictions, including how the shifting conversation on climate change hits his planning. His perspective on leadership and on our evolving energy needs is instructive. So let's get to it. I'm Bob Safian. I'm here with Scott Strazik, CEO of global energy company GE Vernova. Scott, welcome back to the show.
Bob, thanks for having me. I appreciate the opportunity to connect with you today.
Yeah. So GE Vernova is now one year into life as an independent public company. Much to celebrate. Your revenue rose to $35 billion. In 2024, GE Vernova was the year's fourth best performing stock. Again, a lot to celebrate. But in 2025, the external environment hasn't been as friendly. Trump tariffs have everyone scrambling. Like, how do you think about this moment? How do you think about it compared to a year ago at this time?
Well, you know, our end markets really haven't changed very much, Bob. I would start there. I mean, we continue to see very strong end markets in our larger core businesses, in gas power and in our electrification and grid businesses. So frankly, you know, there's going to be moments of dislocation between the stock market and our end markets. It doesn't mean that, depending on where the tariffs go, that doesn't create an opportunity for us to prove out our nimbleness in managing our global supply chain, and we're going to have to do that. But I think it's frankly an opportunity for us to demonstrate how much we've grown in our first year as a public company to be able to operate in this kind of environment.
So you mentioned the agility that you have, and it's going to be under test, I guess, with this sort of the tariffs. How do the tariffs practically impact your business? I mean, you're a global business, so changes in global relationships and reputation, all of that requires some adjustment.
Yeah. I think even if you take a step back and think about some of the stuff I've talked to our investors about on where we want to make investments, we want to invest in our business where we can improve the durability or the resiliency of our supply chain. And that's simply because we have a lot of organic growth that's coming in our businesses, irrespective of any policy changes. Policies are going to change. They're going to evolve. This is going to force us to relook at where we source certain things. It'll force us to revisit our terms with some of our suppliers in different locations. But we know how to do that. So we don't want to be too fast to respond as we're kind of trying to make sense of everything, but I'd also rather be a company that is quick on its feet in this environment. President Trump announced the tariffs on a Wednesday afternoon after the market closed. Rest assured, you know, by Friday afternoon, our teams were actively working evaluation plans of what our alternatives are. Now, it doesn't mean within 48 hours you pull the trigger in a dynamic period of time, but we're working it pretty hard right now to figure out what our alternatives are. And with a growing backlog, to the extent our backlog is growing so substantially, that also puts us in a privileged position with our supply base to come and say, listen, this is what it's going to take to keep serving GE Vernova.
It's almost like there's been a pullback around the very idea of globalization, that like maybe it's not good to be a global organization. Do you think about that?
Well, when I think about my first four months of the year, I mean, my first trip of the year was to Singapore and Japan the first week of January. I had a great trip in the Middle East in February, visiting Saudi, Qatar, Dubai, Abu Dhabi. These are all important markets for us. You know, I think we've got opportunities to serve these markets throughout, and we're going to work really hard to earn those opportunities. At the same time, long before announcements with tariffs, the reality is there has been an evolving shift with globalization. There's certainly been a lot of strategic moves towards concepts of decoupling from the Chinese supply chain explicitly. So we've been working that over a long period of time. The last week certainly has been broader than any one country, and with it, it forces you to really revisit it on an even more intimate way, what you do and where you do it. But we can do that. We're capable of taking that on, and I'm highly confident we can use this moment to make ourselves a better company for the long term.
You recently launched the company's first global ad campaign, 'The Energy of Change,' around this idea that it's a time of opportunity in the energy sector. Why that messaging now? Does that change at all given the tariffs, or that remains as strong as it ever was?
I think even more so. This is very much about bringing a new energy to the energy transition. And the reality is, when it comes to climate change as an example, there's a lot of people that go at that conversation with a somber, negative, pessimistic tone that we reject inside GE Vernova. Think about the hyperscalers as an example that care deeply about sustainability. They need more electricity. They're going to help us move decarbonization technologies left, like nuclear, like carbon capture, that otherwise wouldn't be there. I would make that same argument, although it may not have been the intent of our first global campaign, that we're trying to bring the right energy to this conversation of globalization too. Think about India, most populated country in the world today. It's still getting 80% of its electricity from coal. That's an incredible opportunity for us to serve that market. I was in Saudi in February. They're still getting 40% of their electricity from oil. They want to get to 50% gas, 50% renewables by 2030. We can serve that market. So I think there's real opportunities for us to accomplish substantive things in the near term, both on decarbonization but being a leading global company.
I mean, you and I were on stage together at the climate conference last June, and you talked some about your vision of sort of modernizing the US energy system, energy elsewhere. Climate change seems to be a topic that's kind of less in vogue maybe right now than it was then. Does that shift your priorities, your plans? Or no, you're still committed that that is a priority for you?
When we talk about sustainability, we very much talk about it in the context of electrification and then decarbonization. And in that vein, it's how do we add more electrons to the world every day while making the average carbon intensity of those electrons cleaner. That's been our guiding true north for over a year. It remains our true north. We do think it's very important that we add the electrons, but we see a lot of ways to decarbonize them as we go. So I think we remain just as committed today as we were yesterday. And no, I don't see that really changing for us.
And when it comes to say like wind energy, GE Vernova supplied half the turbines for the largest wind farm project in the Western Hemisphere, SunZia, a $5 billion project in New Mexico. President Trump has sort of bashed wind turbines as eyesores that harm wildlife. Does that sort of government resistance impact where you deploy your efforts as a business?
Well, I was in Pensacola, Florida last week, which is one of the locations where we make our nacelles for the wind turbines, where all of the electrical equipment and generators are stored at the top of the wind turbine. And this is a facility we've been continuing to invest in, and it's about 700 employees, about 20% are veterans. We're excited about where we're going with wind. If I give you an example of something that from an innovation perspective that's really changed in the last year, we're at a point now with our wind blade technology that every blade we manufacture, we use a crawler that crawls through the inside of the blade and takes visual images that we're now leveraging with artificial intelligence to strengthen the quality of our blade manufacturing process. I use that example to just say we're in this business and we're investing into it. Now, at the moment, truth be told, our North America wind orders are soft. We expect them to be soft the first half of the year as our end customers get more clarity on US policy as it relates to wind, but we see a role for wind to play. We're going to be very well positioned to serve that market.
You mentioned the use of AI in your wind blades, and you know, AI requires a lot of energy. GE Vernova in some ways has almost been swept up in some of the AI enthusiasm, almost AI adjacent, right? Do you worry about an AI bubble or what happens in that industry impacting you?
Well, I think the AI demand cycle is still a small proportion of our overall end markets. So there's a lot else going on here. You have just the development of reindustrialization of the US with manufacturing for a long time. As we were driving the most efficient global supply chain, that may have been weighing down electric load growth in places like North America and Western Europe and driving more load growth in China with coal as an example. As some of that decoupling takes place, it requires more supply chain growth in more locations, and those need electrons. There's a lot of reasons why we're going into a period of time here that we see electric demand growth being substantial. I analogize that back towards, in the case of the US and Western Europe, more like after World War II, 1945 is the right baseline comparison point on how much more electricity is going to be needed. AI is part of that, but it's one of many drivers.
If there is an influx of more manufacturing in the US, which obviously the administration wants, all of that manufacturing requires energy to be able to operate, and that is opportunity and growth for you because the system needs more capacity.
You have announced investing $600 million in US factories yourself, creating over 1,500 jobs. How much does GE Vernova need to be an American company?
I would say more we need to be a local company for our local markets. I think in your bigger markets, you're going to have a local supply chain to serve that market, local teams to serve that market. We're a global company where at this moment, one of our most important local markets certainly is the US, and that's why we're investing into that market. But we're not going to not invest in some of these other countries that are attractive markets too, to be local there.
There have been some speculation that the speed with which US manufacturing can ramp up to replace things that might have come from abroad, that that's going to take a while and there's going to be disruption. Is that something for your business that you see, that you worry about, or is that part of the nimbleness I guess that you're talking about on the part of your team?
We do have a fair amount of industrial footprint in the US that allows us to build on existing assets. So the $600 million investment is reinvesting in existing assets, 1,500 jobs to locations that already have the concrete poured, they already have the cranes, they already have the logistics with the railroad adjacent to the factory. So we can move reasonably quickly. Now, to the extent the policy environment drives us towards greenfield investments to reindustrialize parts of our supply chain, that would take longer. Truth be told, that's a multi-year journey that at this point we aren't necessarily evaluating, but we will keep looking in that regard. But first and foremost, we're going to keep trying to eliminate waste in our existing processes and build upon the assets we have. And we feel like that can carry us for a period of time. Now, where we don't have it, as an example, you know, we announced and closed an acquisition of a supply chain footprint from Woodward. That was a vertical supply chain integration of a small part of Woodward's business, but for our gas business, an important part of our supply chain where we thought it made more sense to just have that internal.
