Citing “challenges in the power market worldwide,” GE Power has announced plans to reduce its global headcount by approximately 12,000 positions, affecting both professional and production employees. Notably, however, GE’s wind power segment will not be affected.
The headcount reductions, combined with actions taken previously in 2017, will position GE Power to reach its announced target of $1 billion in structural cost reductions in 2018, the company says. This announcement also aligns with GE’s effort to reduce overall structural costs by $3.5 billion in 2017 and 2018. A GE spokesperson has confirmed with North American Windpower that none of these job cuts will affect GE Renewable Energy.
Explaining its reasoning for the plan, GE says 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, importantly, an overall growth in renewable energy.
In turn, GE Power says it 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, the company claims.
“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,” says Russell Stokes, president and CEO of 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.”