GE Power announced that it plans to reduce its global headcount by approximately 12 000 positions, affecting both professional and production employees.
“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.”
The company said the reductions, combined with actions taken previously in 2017, will position GE Power to reach its announced target of $1 billion in structural cost reductions in 2018. GE said its announcement aligns with the company’s effort to reduce overall structural costs by $3.5 billion in 2017 and 2018. These actions will strengthen GE Power’s global competitiveness and drive increased value for customers and shareholders, the company said.
GE said the moves 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 utilization, fewer outages, an increase in steam plant retirements and overall growth in renewables.
GE Power said it is rightsizing the power business to reflect 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.
“At its core, GE Power is a strong business,” said Stokes. “We generate more than 30% of the world’s electricity and have equipped 90% 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.
These latest actions follow an announcement in mid-November that GE was aiming to streamline its broad portfolio by selling its locomotive and lighting units and concentrate on power generation, aviation and healthcare.