GE slashes 12,000 jobs in response to changing power markets

The multinational conglomerate, co-founded by Thomas Edison, has announced its power business will cut 12,000 jobs – both professional and production – globally on the back of a changing energy landscape, characterised by weakening traditional power markets and renewable energy growth.

“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,” said GE Power in a statement released yesterday.

Overall, the company is looking to remove $3.5 billion in structural costs in 2017 and 2018.

While GE was not available for immediate comment, various media outlets have reported that Europe will see 4,500 jobs slashed, 1,600 of which will occur in Germany, and 1,100 in the U.K.

Mega trend: Storage

Reportedly, GE’s renewable business will not be affected by the announcement. Recognizing the now fundamental role renewables play, General Electric Company Chairman & CEO John L. Flannery said at an investor update, held on November 13 that there is currently a “strong growth curve” for this sector, with “a lot of disruption in the space.”

The merger of renewables and storage was identified as a “mega trend” and is something the company is working on in its research center. “The challenge in that business and things I’m focused on is really the margin rate. This is an intensely price-competitive industry, and margin rate and getting our product cost down and making sure our LM [Wind Power] acquisition performs well is a key thing for us,” said Flannery.

He added that despite this, GE still believes gas will remain a baseload option, “especially as we look at the reductions in coal plants, potential retirements in nuclear and to stabilize the renewable power that’s going to be coming onto the grid, given some of the intermittency nature that it still has.”

In May, GE Energy Financial Services, a business unit of GE said it had exceeded $15 billion in global renewable energy investment commitments in wind, solar, and other related projects.

“Over the past three years, GE Energy Financial Services has committed to invest approximately $5 billion in renewable energy projects, exceeding its 2014 commitment to invest $1B per year,” read a statement.

“Renewable energy has a vibrant future with demand increasing across the world, and it creates jobs and addresses global environmental challenges,” added David Nason, President and CEO of GE Energy Financial Services. “With GE at the forefront of technology and digital advancements, we continue to invest in this attractive asset class.”

Solar PV activities

While wind is a key focus of GE Renewables, the company is active in the solar industry. This year, it has made a number of new venture announcements, including:

GE Renewables has over 22,000 employees in more than 55 countries. In Q3 2017, the group’s revenues reached $2.9 billion, up from $2.77 billion in Q3 2016. For the first nine months of the year, GE’s renewables revenues rose to $7.41 billion, up 13% year-on-year. Profits, meanwhile, were $257 million, representing an annual increase of 27%.