In a startling revelation, General Electric Co (NYSE:GE) has announced its plans to cut a whopping 12,000 jobs to save around $1 billion in 2018 at its global power business because of seemingly dwindling demand for fossil fuel power plants.
The company said that traditional power markets including gas and coal have seen gone soft. The company added that while the step was a painful one, it was necessary for GE Power to respond to the disruption in the power market. The job cuts are geared towards ensuring that the company has a better position for 2019 and beyond.
Switzerland will be the worst hit country as a third of the company’s Swiss workforce face layoffs, while 16 percent of its staff in Germany are also likely to be axed in the shake up. GE said it had begun talks with labour leaders about the steps.
GE said that there has been a massive decline in demand for new thermal power plants in all rich countries, while traditional utility customers have reduced their investments due to market deterioration and uncertainty about future climate policy measures.
Hardly any new power station projects had been commissioned in Germany in recent years, GE said. Heightened Asian competition had also increased price pressures.
Last month, General Electric CEO John Flannery outlined plans to reduce the manufacturing footprint of GE`s power business to respond to a sharp fall in demand for fossil fuel power equipment. GE had not specified how many jobs would be cut or where.
GE rival Siemens is cutting about 6,900 jobs, or close to 2 percent of its global workforce, mainly at its power and gas division, which has been hit by the rapid growth of renewables.