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GE Cuts 12,000 Jobs In Response To Falling Demand For Fossil Fuel Energy (qz.com)
In response to the drop in demand for fossil fuel energy, General Electric -- the world's largest maker of gas turbines -- announced plans to cut 12,000 jobs. Quartz reports: Those cuts will mostly come from GE's power division, which makes energy-generation technologies. The reduction will account for 18% of the division's workforce and affect both professional and production employees, the company said in a statement. The majority of job losses will occur outside the U.S., Bloomberg reports. In a statement, Russell Stokes, the division's president and CEO, said disruptions to the power market were "driving significantly lower volumes in products and services." Demand for GE's power-generation equipment has stalled in part because of renewable energy growth, says Robert McCarthy, an analyst at Stifel Financial.
The move is part of a larger restructuring effort under GE's new chief executive John Flannery, who has faced immense pressure to regain the company's footing since taking the helm in June of this year. GE's stock price plunged 44% this year, the worst performer on the Dow, according to Bloomberg. The company aims to cut $3.5 billion of expenses across its divisions by the end of 2018, including a $1 billion cut from the power division.
The move is part of a larger restructuring effort under GE's new chief executive John Flannery, who has faced immense pressure to regain the company's footing since taking the helm in June of this year. GE's stock price plunged 44% this year, the worst performer on the Dow, according to Bloomberg. The company aims to cut $3.5 billion of expenses across its divisions by the end of 2018, including a $1 billion cut from the power division.
That's just said and not fair to the employees at all. Fossil fuel was already a risky area to jump in. They should've seen it coming.
This is the Corporate equivalent of Darwin in Action.
There have been so many indicators of a shift away from fossil fuels that no company operating in that market sector - and certainly not a company as large or well established as GE, can have any excuse for not being aware of this fact.
The failure of GE to anticipate this market shift and adjust their corporate strategy to accommodate it would be the responsibility of John Flannery's predecessor, Jeff Immelt and the board of Directors that he led. Whilst unforgivable, it is certainly not the first time that we've witnessed such corporate hubris. Look at what happened to Kodak as a result of the "digital revolution" for example.
The most egregious aspect of this story is the one that doesn't seem to be explored properly: the fact that 12,000 people have lost their jobs because of utterly incompetent management. And what happens to those incompetent managers? In the case of Immelt, at 61 he stepped down from the CEO role and planned to continue as Chairman to the end of this year, but got pushed out of that by Flannery on October 2nd. Not a moment too soon, looking at this mess. So Immelt will cruise into retirement with a massive 401k, not to mention all the stock options he's had over the years. A shame that 12,000 families are now going to pay the price for his incompetence.
I'm sure that they are different at a detail level, but at a *scale* level there have to be parallels between the manufacture of turbine blades used in fossil fuel power generation and the technologies used for wind or hydro power generation. Why didn't GE begin a ramp-up into those emerging technologies when they had the time and revenue to carry it? This article headline should have read, "Over the last 18 months, GE have switched 12,000 Jobs from Fossil Fuel to Renewable Energy Technologies".
The fact that it doesn't should herald a managerial bloodbath, and the installation of a competent board of directors. Meanwhile, back on Planet Earth...
LED lighting is killing GE. It's a double whammy. Not only did they lose their entire incandescent lighting business, but the new LED bulbs need to be replaced less often, draw less power, and result in lowered demand for electricity generation. Historically GE has benefitted from inefficient use of electricity, and hasn't been able to adapt to the current reality.
China is building 700 new coal plants in China and around the world over the next 5 years. The technology is what GE gave them. However, in America, we stopped im-ex bank supporting building coal plants. Otoh, China doubled down on it and there is adding another 43% more coal plants than exists today.
I prefer the "u" in honour as it seems to be missing these days.