General Electric’s (GE) new chief executive John Flannery is axing 1,100 jobs across its European operations, mainly in Stafford and Rugby in central England, as part of worldwide cuts that will see about 12,000 staff, or 4 per cent of the workforce, face the chop.
Previous CEO Jeff Immelt spent US$10 billion on an ill-fated acquisition of the European energy business of Alstom, where the cuts will be felt most severely.
GE said the move would allow it to save around US$1 billion by next year, adding that it had begun talks with union leaders about the move.
“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, 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.”
The firm suffered with reduced demand for fossil-fuel power installations, and the job cuts are the latest move by the bloated multinational to become more focused.
The GE Power division, which includes Alstom’s power and grid businesses, makes turbines and other equipment for gas- and coal-fired power installations that have been hit since the 2015 acquisition of Alstom by the rise of renewable energy.
The firm has previously said it would ditch its lighting, transport, industrial solutions and electrical-grid interests. There are also plans to sell its 62.5-per-cent stake in oilfield services provider Baker Hughes.
GE had been excessively optimistic about the gas-fired power market this year, over-estimating demand for service packages used to improve performance and for smaller turbines used specifically during peaks in electricity demand.
The power giant said it had about 295,000 staff across the globe at the end of 2016.
“General Electric is in danger of cutting too far, too fast and leaving itself ill-equipped to meet the challenges of the changing power-generation market,” Unite representative Linda McCulloch said. “These proposals will be a shock for General Electric’s loyal workforce and deal a major blow to the Midlands’ economy which will be deprived of highly skilled, well-paid jobs because of this announcement.”
Unite would support its members who were losing their jobs, McCulloch said.
“Unite will also be seeking guarantees from General Electric that there will be no compulsory redundancies and that there will be redeployment opportunities for workers wishing to stay with the business,” she added.
Former US president Barack Obama looks at a turbine rotor while touring a General Electric plant. Picture credit: Obama White House Archives