General Electric (GE) has announced that it will be restructuring its global power business, which will result in an estimated 12,000 job losses across the company. According to their statement, GE claim that this is necessary to streamline its services and become a more efficient and focused company.
According to their press release, GE said that “The market conditions have had a significant impact on GE’s economic performance. Demand for new built power plants dramatically dropped in all OECD countries. Traditional utility customers have reduced their investments due to market deterioration and uncertainty about future climate policy measures.”
“Today’s actions 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. To get back to competitiveness GE Power needs to remove cost substantially from its businesses.”
The US based company has launched this new set of spending cuts as part of its plans to save $1 billion next year in its power business, which it says is in response to declining demand for fossil fuels. GE has yet to provide a breakdown of where the job cuts will be made, but they will be losing an estimated 4% of their total workforce and 18% of their Power Business.
GE says that the majority of cuts will be outside of the US, and it’s thought that Switzerland, Germany and the UK will be hit hardest by the job losses. The UK’s largest trade union, Unite, said that up to 1100 jobs could be at risk and that it will dispute any compulsory redundancies that GE try to make.
Although these job cuts are very concerning for employees, GE said they’re essential due to the long term decline in their sales of new power plants. Experts in the industry expect that the total sales of gas-powered turbines each year should be around 100-120, whilst the total capacity of major suppliers is at least four times higher.
According to Russell Stokes, head of GE Power “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 has confirmed that jobs in France won’t be affected because of the agreement that was made when the company purchased Alstom, however a third of the 4500 jobs in Switzerland could be cut and at least 16% of Germany’s staff could lose their jobs. According to GE, talks with unions in the affected countries have begun in order to discuss the next steps.