General Electric (GE), Boston, said it will eliminate 12,000 jobs in its Power Division in response to changing market dynamics and the company’s need to cut costs to improve profitability. The cuts to headcount, which will affect both professional and production employees, are part of a push to remove $1 billion from the division’s structural costs in 2018, GE said in a release. The company overall aims to cut $3.5 billion in structural costs as part of a plan by new chairman and CEO John Flannery to improve GE’s performance and attractiveness to investors.
GE said the moves are driven by challenges in the power market worldwide. Construction of new fossil fuel power plants has slumped dramatically. “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,” the release said. The move to “right-size” the business is intended to improve operations, reduce footprint and drive improvements in cash flow 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.”
