General Electric To Cut 12,000 Jobs In Bid To Stabilize Its Power Unit
General Electric (GE) has been struggling recently and in a bid to reduce costs and stabilize its power unit, it announced plans to cut 12,000 jobs.
The layoffs will make up roughly 18 percent of the workforce currently employed at GE Power and will affect both production and professional workers. According to GE, its power unit has to recover after taking a hit as customers are increasingly considering alternatives to energy sources based on fossil fuel.
The upcoming job cuts at GE's global power unit mark the company's latest attempt to regroup and refocus as traditional power markets, including coal and gas, are not as powerful as they used to be. GE expects these job cuts to help save $1 billion next year, as demand for fossil-based fuel will likely continue to dwindle.
GE Job Cuts: 'Painful But Necessary'
"This decision was painful but necessary for GE Power to respond to the disruption in the power market," explains Russell Stokes, GE Power division chief. "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 yet to specifically detail its layoffs plan, but the bulk of the job cuts will likely be outside of the United States. Some labor union sources confirmed the job cuts and GE Power staff in Germany and Switzerland are among those most affected by the layoffs. GE has 4,500 workers in Switzerland, and almost a third of those will face layoffs.
In Germany, 16 percent of the workforce is expected to get the boot. The job cuts will also affect roughly 1,100 positions in Britain. Positions in France are expected to remain unaffected as GE agreed to some stipulations upon purchasing Alstom SA's energy business back in 2015.
Germany Union Leaders To Oppose The GE Job Cuts
GE reportedly started talking to labor leaders regarding the job cuts and the necessary steps to follow from now on, but German union leaders strongly oppose the move.
Klaus Stein, representing the IG Metall Union at Mannheim's GE plant, argues that these job cuts are not justifiable neither from a strategical nor an economical point of view and they only aim to boost shareholders' profits in the short term. Stein adds that they are ready to fight to keep their jobs rather than accepting this decision as it is.
Some analysts, however, see the job cuts as a logical step considering the current state of the global power market. Considering the challenges it faces, GE has to boost its cash flow and margins while reducing its footprint and workforce.