As part of a turnaround plan launched by the company’s new leadership, on Thursday (Dec 7) General Electric Co said that it plans to axe more than 12,000 blue and white collar jobs in its GE Power business unit. The layoffs, aim to reduce overall structural costs by US$3.5 billion in 2017 and 2018, will predominantly impact facilities outside the United States.
In an official statement, GE Power chief executive Russell Stokes said that while the decision is difficult to take, such move is necessary for GE Power to respond to the disruption in the power market that has affected in lower volumes in products and services. Workforce leaders in affected countries recoiled at the announcemen, Straits Times reports.
Klaus Stein, director of IG Metall the metalworkers’ union in Germany, where about 16 per cent of GE’s workforce will be eliminated, commented that GE’s announcement to cut thousand jobs in Europe has no strategic purposes other than to maximise short-term profits for its shareholders.
The move was announced as newly-installed chief executive John Flannery works on taking the US industrial giant back on track as key divisions (power, oil, and gas) struggle to deal with weak demand, as they compete with the growth of renewables. The company is facing lackluster demand and global overcapacity of gas turbines and other power equipment. Such condition has pressured results at GE and its rivals such as Siemens, which also announced it layoffs plan last month due to low demand.
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GE job cuts are predicted to affect about 18 percent of total energy unit’s global workforce. The company said it also proposes to shrink its capital spending and research and development department.
About half of the GE job cuts are done in Europe, with the remainder around the world. Some 1,100 workers would be affected by the layoff in Britain, 1,400 in Switzerland, and other 1,600 in Germany, where several cities including Stuttgart and Berlin would be affected as well. According to a person familiar with the matter, the job cuts would not affect workers in France.
Two people familiar with the matter added that General Electric was required under a 2015 deal to acquire the energy assets of France’s Alstom to increase overall French employment by 1,000 by the end of 2018.
John Flannery, a longstanding GE executive promoted over the summer to the top post, revealed last month about a turnaround plan which included slashing about 6,000 jobs in its corporate division, as well as an unspecified number of layoffs in several operational divisions. The plan also included disinvestments of some businesses, a dividend cut, a reduction in the size of the board of directors, as well as a new compensation system to better tie executive pay to performance.
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