Strategy and vision

Our strategy is focused on improving our core competitiveness and delivering higher productivity solutions today while positioning for the future. In order to drive our strategy forward, we developed a three-pronged approach to guide our execution, which consists of transforming our core, investing for growth, and positioning for new frontiers in the energy space.

Transforming the core represents our focus on improving margins and cash flow across our businesses through cost improvements, portfolio rationalization, and new business models. We execute this strategic priority by deploying high efficiency technology, expanding the use of remote operations, and implementing digital technology and artificial intelligence (AI) with our customers.

Investing for growth centers around expansion into high-potential segments such as industrial power, industrial asset management, nonmetallic materials, and chemicals. In 2020, more than 45% of our revenue was industrial in nature. We are advancing this work through the formation of our new non-metallic joint venture with Saudi Aramco and the opening of new manufacturing facilities.

Positioning for new frontiers underscores our commitment to help meet global energy demand by offering lower-carbon solutions across industries. We have deployed existing solutions for customers, while making strategic long-term investments in carbon capture, hydrogen, and energy storage. We have enhanced our energy transition capabilities during 2020 through the acquisition of Compact Carbon Capture (3C) and the introduction of the world’s first “hybrid” hydrogen turbine designed for gas networks.

 

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13 - Transform Icon
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13 - Invest Icon
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13 - Position Icon
Transform the core
Invest for growth
Position for new frontiers
Improving margins and cash flow through cost improvements, portfolio rationalization, and new business models.
Driving growth in high-potential segments like industrial power and process technology, industrial asset management, non-metallic materials, and chemicals.
Making strategic investments to drive the decarbonization of energy and industry with carbon capture, utilization and storage, hydrogen, and energy storage.
 

 

Economic impact

We take our responsibility to power global and local economies seriously. As a provider of technology and services, we are a critical part of the world’s energy infrastructure, and we believe in lowering barriers to clean, affordable energy for everyone, everywhere.

In 2020, our company generated a direct economic value of $20.7B in revenue. That economic value was distributed to a wide variety of global stakeholders as outlined in the chart to the right.

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Executive team social distancing

We develop and rely on a network of suppliers who provide raw materials, equipment, supplies, and services. Annually, we spend $10.3B in direct and indirect material purchases. Of this, 82% is spent with suppliers in the countries where we operate. During 2020 we spent $93M with diverse suppliers and small businesses. This is an area we are actively working to improve.

Our economic impact also extends to our role as a global employer. At the end of 2020 we employed approximately 55,000 employees worldwide and offer fair and competitive wages and benefits. We believe in developing a diverse and global workforce in the countries where we operate. Seventy-eight percent of our employees and 63% of our senior managers work outside the United States in more than 80 countries.

 

Economic value added ($ millions)

 

2019
2020
Revenues
$23,838
$20,705
Operating costs*
$22,237
$19,664
Returns to shareholders
$995
$744
Payments to governments (taxes)
$438
$441
Community investments
$25
$119

* Operating cost is a non-GAAP number. It is defined as total costs and expenses, less charges for goodwill and impairments; restructuring impairments and other charges; and separation and merger-related charges

Investment in innovation

As an energy technology company, Baker Hughes is committed to advancing innovation and promoting new technologies across our operations. Even during the economic uncertainty of 2020, we maintained our intense focus on technology development, investing $595M in research and development, and being awarded 3,066 patents—an increase over prior years. We advanced our use of digital technology and automation, which we see as an enabler of lower costs, lower emissions, and reduced health, safety, and environmental (HSE) risk. For example, we conducted virtual gas turbine tests in our TPS business. Our iCenters in Florence, Houston, and Kuala Lumpur monitor more than 900 customer assets and have accumulated more than 15 million hours of equipment data.

We believe AI can be one of the next frontiers in unlocking energy efficiency and safety. Through BakerHughesC3.ai (BHC3), our strategic relationship with C3.ai, we have launched two software solutions—BHC3 Reliability and BHC3 Production Optimization. They were designed to help our customers use AI-derived insights to reduce their risk and improve the efficiency of their operations.

$595M
Invested in research and development
3,066
patents awarded* (corrected)

 

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BH employee looking through microscope