GE’s power business has, like that of Siemens, also been underperforming recently, with John Flannery, chairman and CEO, describing the 3Q2017 results as “unacceptable”. Plans to address the issues were presented at an investor update on 13 November. The company has already sold its water business to Suez and intends to divest a further $20 billion of assets over the next 1-2 years, including Transportation (principally rail), Industrial Solutions (being sold to ABB), Lighting and Current (LED lighting and energy management), plus other smaller businesses, and maybe some of its oil and gas interests. Power will remain a key focus, along with aviation and health care, but, excluding renewables, it is a “challenged business right now”, said Flannery. “It’s a heavy lift to turn around, but it’s a fundamental asset, a strong franchise.” It is a tough market, “and we have exacerbated the situation with some really poor execution.”
GE has already made significant management changes, with Russell Stokes replacing Steve Bolze as CEO and president of GE Power, and Scott Strazik replacing Paul McElhinny as head of the power services business.
GE is reducing its power market expectations for 2018, described as a “reset year”, and planning a further $1 billion of cost-out, with right-sizing to match market conditions and more focus on cash and returns. Among the failings have been overoptimistic forecasts, “dislocated from the market”. The Alstom power businesses have also performed below expectations.