To enable $3 billion in cost-savings post purchase of Alstom SA’s energy business, GE attempt massive global restructuring efforts to eliminate 6,500 jobs in Europe. The job cuts will impact 1,700 key positions in Germany, 765 in France to trim overlapping expenses, post one of the largest-ever acquisitions that closed in November 2015.
Through these cost-cutting measures and layoffs, the company expects to generate $1.1billion in savings this year and almost three times the amount by the end of the decade.
“This is a necessary step to increase the competitiveness of the former Alstom businesses and generate the synergies we have targeted,” Deirdre Latour, a GE spokeswoman informed by email, Bloomberg reported. “We will work constructively with employee representatives throughout the process.”
With Chief Executive Officer Jeffrey Immelt chairing the helm of operations, the multinational giant aims to broaden company’s reach in the energy markets. Plans are also underway to expand divisions that make generators and oilfield equipments, while selling off consumer-focused and finance operations. The deal with Alstom has tightened GE’s grip on the lucrative business fronts of servicing and maintaining gas turbines, while adding joint ventures in electrical transmission and renewable energy business.
These job cuts represent about 14 percent of the 48,000 people that the company’s power division employs in Europe, after the Alstom acquisition. However, GE based in Fairfield, Connecticut promised to create 1,000 new jobs in France to win government support for the deal.
See: Shell braces for extended low oil prices with mass job cuts
“We will absolutely ensure that General Electric sticks to its commitment to create 1,000 new jobs and will replace every job which it scraps in France with a new one,” French Economy Minister Emmanuel Macron told reporters in Paris.
Layoffs were expected post this major acquisition, Nicholas Heymann, a William Blair & Co. analyst, said in an interview. He further added, “They’re adjusting the cost structure initially and then over time they’re going to build the business because they’re winning orders. Then they’re going to grow the workforce. GE’s confidence in its ability to achieve the $3 billion of synergies over the first five years is higher than ever.”
Earlier last month, GE announced of having won $1billion contract of gas turbines and servicing on a new power plant in Saudi Arabia. This agreement followed recent electricity-generation deals in the U.S., South Korea and Pakistan.
The planned job cuts come on top of reductions elsewhere in the energy industry, which is grappling with a prolonged slump in the price of oil. BP Plc said Tuesday that it would eliminate 4,000 jobs in crude production. The oil industry has reduced employment by about 250,000 in the past 18 months.
Separately, GE said Wednesday it will move its headquarters this year to Boston to take advantage of the area’s technology talent.
News credits: Bloomberg.com
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