General Electric to cut 12,000 jobs in electrical power division

General Electric (GE) yesterday announced that it is cutting 12,000 jobs to save $1 billion in its electrical power division, after misjudging the global shift from fossil fuels to renewable energy.

The cuts represent about 18 per cent of GE's Power business and about 4 per cent of its overall workforce of 295,000.

GE's announcement comes a few months after Siemens AG decided to slash 6,900 jobs in its electric utilities unit.

''This announcement aligns with GE's effort to reduce overall structural costs by $3.5 billion in 2017 and 2018. These actions will strengthen GE Power's global competitiveness and drive increased value for customers and shareholders,'' GE said in a statement.

GE, the world's largest maker of gas turbines, said that the job cuts will include both professional and production employees but did not disclose details.

Reuters reported that employees in Switzerland and Germany are badly hit by the changes.

GE said that job cuts 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.''

''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.

''We generate more than 30 percent of the world's electricity and have equipped 90 percent of transmission utilities worldwide. Our backlog is $99 billion and we have a substantial global installed base. This plan will make us simpler and stronger so we can drive more value for our customers and investors,'' he added.