On Thursday, General Electric announced that it is slashing 12,000 positions within the company amid a shrinking power business globally. The U.S. firm said that layoffs would help it stay more focused.
The labor cuts will enable GE to save up to $1 billion next year when it expects a lower demand for fossil fuel-powered power plants. The latest announcement comes shortly after Siemens AG announced 6,900 cuts amid a growing demand for renewable energy sources.
GE did not offer more details on the workforce revamp, but the layoffs would mostly affect jobs located outside the U.S. The decision will impact 4 percent of its workforce which accounts for 295,000 people. The layoffs account for 18% of its Power Business, the company said.
The decision comes two years after GE promised to invest $10.7 billion in France’s energy business. After the deal with France, it added nuclear power and steam as energy sources to its power business, which at the time, relied on natural gas mainly.
However, at the time of the deal, the global demand for power plants was already dwindling as the world started switching to green energy.
GE Notes Conventional Power Markets ‘Have Softened’
On Thursday, GE acknowledged that regular power markets “have softened,” which prompted the job cuts.
On Wednesday, several labor unions in the U.K., Germany, and Switzerland confirmed the layoffs. These three countries were the worst hit by the decision. The U.K.’s biggest trade union, Unite, reported that 1,100 jobs would be gone. The group vowed to fight any additional layoffs in the U.K.
Industry analysts believe GE may be cutting jobs “too far, too fast” in an effort to accommodate to a shifting power market. GE responded that the layoffs are essential since global demand for new power plants has shrunk dramatically.
Current estimates place the global demand for gas-based turbines at 120 per year. Yet, GE’s capacity is four times higher than that.
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