General Electric (GE) will lay off 12,000 employees in its GE Power business in a move to cut down the unit’s overall structural costs by $3.5bn by the end of 2018.
The decision is set to impact both professional and production employees of GE Power across more than 150 countries where it has operations. The company has a total workforce of more than 55,000 employees.
GE Power says that the workforce reduction is the result of the challenges faced in the power market globally. It added further that conventional power markets like gas and coal have weakened.
GE Power has revealed that volumes have gone down considerably in terms of products, while services have been driven by overcapacity, reduced utilization, lesser outages, an increasing number of steam plant retirements, and overall growth in the renewable sector.
The company says that it is focused on enhancing operational excellence and cutting down its footprint and structure. Through these measures, it anticipates to see its cash flows and margins improved significantly.
Combined with prior actions taken in 2017, the latest headcount reductions are expected to help GE Power achieve its announced $1bn target in structural cost reductions in 2018.
The company believes that the actions will boost its global competitiveness and deliver increased value for customers and shareholders alike.
GE Power president and CEO Russell Stokes said: “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.
“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.”
GE Power says that it is in the process of informing its employees about the proposals and may begin consultations with them and their representatives.
Image: General Electric Research Laboratory in Schenectady, New York. Photo: courtesy of UpstateNYer/Wikipedia.org.