GE Power has announced that it plans to reduce its global head count by approximately 12 000 positions, affecting both professional and production employees. The head count reductions, combined with actions taken previously in 2017, are intended to position GE Power to reach its announced target of $1 billion in structural cost reductions in 2018. The announcement aligns with GE’s effort to reduce overall structural costs by $3.5 billion in 2017 and 2018.
These actions are aimed at strengthening GE Power’s global competitiveness and driving increased value for customers and shareholders. GE says its plans are driven by challenges in the power market worldwide. Traditional power markets including gas and coal have softened.
Volumes are down significantly in products and services driven by overcapacity, lower utilisation, 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 onimproving operational excellence and reducing its footprint and structure, which will help drive significant 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 per cent of the world’s electricity and have equipped 90 per cent 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.” Where required, the process of informing and/or consulting with employee representatives regarding these proposals has begun, or will begin shortly.
GE flagged up the likelihood of job losses in November when poor results
for Q3, described by chairman and CEO John Flannery, as “totally unacceptable”, led to plans to divest $20 billion in assets over the next 1-2 years, and an immediate $1 billion of cost-out, with right-sizing to match market conditions and more focus on cash and returns. Businesses to be sold include 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. But the power business will remain a key focus, along with aviation and health care.