GE Will Cut 12,000 Jobs

Cuts will come from GE Power; at least half will be in Europe

General Electric will eliminate approximately 12,000 positions from its power division, GE Power, affecting both professional and production employees, the company announced today.

The “headcount reductions,” as GE calls them, are a result of prior miscalculations of the sectors demand for coal and gas-fired products, as well as part of the company’s blanket effort to restructure under new CEO John Flannery.

Combined with other previously announced aspects of its full makeover, GE expects the cuts will position GE Power to reach its announced target of $1 billion in structural cost reductions in 2018. This aligns with GE’s effort to reduce overall structural costs by $3.5 billion in 2017 and 2018.

Although there is no official word yet on where or when the cuts will take place, the Wall Street Journal reported this morning that about half of them are expected to fall in Europe—at GE’s two large plant operations in France and Switzerland. The company will cut nearly one in five positions in its GE Power unit. Overall, the layoffs equal about 4% of the company’s workforce of about 295,000 employees at the end of 2016. GE did say the job cuts will “be mostly outside the United States”. That still doesn’t instill much confidence for workers of a company whose fall from grace has been extremely woeful and rapid over the past few years.

Flannery’s predecessor, Jeff Immelt, may have contributed to the GE Power’s operational cost burden when he purchased the assets of French rail company Alstom in 2015.

“The plans announced today are driven by challenges in the power market worldwide,” GE said in a press release Thursday. “Traditional power markets including gas and coal have softened. Volumes are down significantly in products and services driven by overcapacity, lower utilization, fewer outages, an increase in steam plant retirements, and overall growth in renewables.”

GE Power is right-sizing the business for these realities and is focused on improving operational excellence and reducing its footprint and structure, which will help drive significant improvements in cash flows and margins.

“This decision was painful but necessary for GE Power to respond to the disruption in the power market, which is driving significantly lower volumes in products and services,” said Russell Stokes, president and CEO, GE Power. “Power will remain a work in progress in 2018. We expect market challenges to continue, but this plan will position us for 2019 and beyond.

“At its core, GE Power is a strong business,” Stokes continued. “We generate more than 30 percent of the world’s electricity and have equipped 90 percent of transmission utilities worldwide. Our backlog is $99 billion and we have a substantial global installed base. This plan will make us simpler and stronger so we can drive more value for our customers and investors.”

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  1. A Day at the Market | Electrical Apparatus Magazine - February 1, 2018

    […] twist: Remember GE’s fateful announcement in December that it was slashing its dividend, cutting 12,000-some-odd jobs, dropping its lightbulb and […]

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