General Electric Co (NYSE:GE) will be cutting 4,500 jobs in Europe, in response to the company shrinking its floundering power business.
The cuts will be occurring in Switzerland, Germany, and Britain, and are linked to businesses that GE bought from France’s Alstom.
When GE bought the power assets of the French company in 2015, GE acquired 65,000 workers from Alstom, $20 billion in yearly revenue, and dozens of offices and manufacturies around worldwide. The acquisition brought GE steam turbine capabilities as well, and a larger installed base of plants that need service.
While the deal itself wasn’t bad, the timing of it was a bit unfortunate. It came at a time when demand for new power plants was slowing, partly due to the competition from wind and solar systems, which are arguably more cost-effective. The timing is what has damaged GE.
Last month, General Electric CEO John Flannery discussed the company’s intention to scale back GE’s power business in response to the sharp fall in demand for fossil fuel power equipment. At the time, there were no specifications outlined for how many jobs this would cost.
GE is looking to integrate its energy connections and power businesses, which should save $1 billion in costs next year and a further $500 million in 2019, but will also cost a lot of people their jobs.
GE’s renewable energy business should not be affected by this integration, only the power business, as the world focus has shifted from fossil fuels to renewable energy.
GE will be attempting to lower overhead costs by $1 billion this year and $2 billion in 2018, with a company shift in focus towards aviation, healthcare, and power.
Already, GE has cut 25% of its corporate staff, about 1,500 jobs around the world, and the official announcement from the company of its further cuts will likely occur soon.
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