8:59 AM, Dec 7, 2017 — General Electric’s (GE) GE Power unit is cutting 12,000 jobs from its global workforce as part of the industrial conglomerate’s bid to reduce costs after it slashed its dividend last month.
The workforce reductions will enable Schenectady, New York-based GE Power to hit its target of $1 billion in structural cost cuts in 2018, according to a statement on Thursday. The cuts will affect both professional and production employees at the company that says it generates more than 30% of the world’s electricity.
“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,” Russell Stokes, president and CEO of GE Power, said in the statement. “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.”
General Electric announced last month a plan to slash its dividend by half and cut the size of its board of directors as it set earnings expectations for 2018 below analysts’ expectations and said the year will be a “reset and stabilize” period.
Fitch Ratings downgraded General Electric’s long-term credit rating due to a “deterioration in the company’s operating and financial performance” and “reduced long-term growth prospects” in the company’s gas turbine division.
GE Power said the savings from the job cuts are part of GE’s effort to reduce overall structural costs by $3.5 billion in 2017 and 2018. The company said the plans “are driven by challenges in the power market worldwide” as traditional markets including gas and coal have softened.
According to its website, GE Power has more than 55,000 employees and is GE’s largest industrial business, earning about $27 billion in revenue last year.
Companies: General Electric Company
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