General Electric Power announced Thursday its intention to cut its global workforce by 12,000. The move comes as GE Power continues to restructure the business to achieve its target of reducing structural costs by $1 billion by 2018.
General Electric Company shares closed 0.51% lower at $17.66, Wednesday in the US. Pre-market trade is currently pointing to a positive open.
Decision adds to other cost-saving changes
The decision, which GE said will affect staff around the world and both in the professional and production sides of the business, follows previous action taken during the year to achieve its cost-saving target.
“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,” said Russell Stokes, president and CEO, GE Power.
“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,” Stokes said. He added: This plan will make us simpler and stronger so we can drive more value for our customers and investors.”
The company is so far not set to close any European factories. However, some 1,400 staff at its Switzerland sites, will lose their jobs, according to a Reuters report.
A total of 4,500 jobs are expected to be cut across its European power operations.
Changing power demands
The move comes as GE Power has identified a changing market backdrop. Demand for some of its previously core offerings isn’t as strong as it once was.
Demand for fossil fuelled based products is waning, replaced by a growing appetite for renewable energy powered stock.
“Traditional power markets including gas and coal have softened,” GE Power said in a press release.
“GE Power is right-sizing the business for these realities and is focused on improving operational excellence and reducing its footprint and structure, which will help drive significant improvements in cash flows and margins,” it added.