American Multinational company, General Electric, has announced on Thursday that it will be cutting 12 thousand jobs in its power division. The move will reduce the unit’s workforce by 18 percent.
The restructuring aims to make General Electric leaner and save $1 billion in 2018 and was driven by challenges in the power market worldwide, according to the company.
They noted that long-term demand for renewable energy has affected General Electric’s short-term prospects and will aim to accommodate the new branch into its services. The Boston-based company registered a loss of 44 percent in market value this year.
As the company notes, power market “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.”
General Electric employees in Germany have been notified that about 1.600 people will be laid off, along with another 1.200 in Switzerland. The company states that around 1.100 jobs will be affected. As of 2016, General Electric employed just under 300 thousand people worldwide, according to the company’s website. Union leaders in Germany found the announcement strategically and economically unjustifiable.
The company predicts that a worldwide restructuring will results in the loss of 12 thousand jobs, almost a fifth of its power division workforce. While they did not elaborate which jobs will be cut, they did specify the changes will take place outside the United States.
General Electric shares were at $17.75, and its market value was up 0.5 percent, according to the Dow Jones Industrial Average. The conglomerate has previously said it would abandon its lighting, transportation, industrial solutions and electrical grid businesses. Aside from this, they also plan to axe its 62.5 percent stake in oilfield services company Baker Hughes.
Karen Ubelhart, a Bloomberg Intelligence senior industry analyst, believes the 18 percent cut and its subsequent $1 billion cost reduction are significant steps in General Electric’s recovery.
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