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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.
It's a Good Thing(TM) they don't pay any taxes at all, otherwise they'd be in real trouble from their own mismanagement.
A large part of General Electric's power division consists of the former power division of Alstom that was bought by GE in 2015 for € 12.4 billion. Alstom may have made a much better deal than it seemed at the time.
That would be a nice indication of progress of our society.
However, this might the "public" explanation which looks good in media.
I can think of two other reasons, which are less flattering for GE; 1) GE fails to be competitive for this type of equipment (for various reasons), or 2) the market for gas turbines shrinks, maybe due to the very high operational costs of gas turbines (they are very expensive to run, for at least electric power generation)
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.
Only $1B of the $3.5B in cuts is in the power division, so to claim it is all due to response to falling fossil demand is incorrect or disingenuous. But accuracy isn't really something slashdot has cared about it some time.
Maybe they can all find work in companies working in the renewable energy sector? Like this one: https://www.gerenewableenergy....
On a long enough timeline, the survival rate for everyone drops to zero.
The market is shrinking. Like GE, Siemens, a major competitor of GE, is also reducing their engagement. In addition Siemens is also reducing steam turbine capacities, as turbines for coal and nuclear plants are in less demand.
1) growth rate of demand is down. Historically, the US could rely on an average 2% growth of peak load a year. That pattern halted in 2007, thanks to the economic downturn plus energy efficiency plus load response programs. In 2017 we have only matched 2008 peak load in the US.
2) extended life of existing plants. In a regulated industry, you overhaul a couple of times and replace with new tech. With deregulation, everyone is squeezing life and extra MW out of everything
3) increased renewable. Wind and solar only make up 15% of total US generation, but that's 15% of new build that wasn't a GE or Siemens steam turbine.
4) increased efficiency. An old 7FA topped out at about 50 MW, but new designs can run up to 120 MW per turbine at lower costs.
5) government subsidies for nukes and coal. The industry was banking on the CPP killing off coal, and now states are proposing subsidies for their "jobs programs" power plants. This adds uncertainty to the future and probably reduced orders.
6) terrible investment in Alstom. They paid peak prices thinking they were going to get steam tech, when all they got was a bloated workforce protected by European labor laws
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.
Solar is predictable at a grid level days in advance, at least +/- 10%. Wind isn’t, even 4 hours in advance. The only issue I can think of that might hurt GE is their turbine ramp times, because the need today is for GW or natural gas that can go from 0-100% in minutes, the same for 100-0%, all while being economical to run.
I can see how the US will get to 50% renewable energy, but going beyond that will take more than lithium batteries and pumped hydro.
Agreed - the headline could have just as easily read: "Over the last 5 years, GE has failed to adapt to changing market conditions".
Ultimately, GE's failed to perform. They're saying something that sounds plausible, and is 'du jour', but the truth of it goes back several years when they should have started to develop alternative products. It's not like we've had any drop in energy demand, so "energy' is still a growth market.
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.
I doubt GE is thinking like that. GE tends to live in these bubbles, where stresses and problems in the market don't show up to them until the last minute, then they need to do dramatic changes. Being GE wants to be #1 or #2 in the market if not they will sell and close off the unit, the people working in stressed units will manipulate as much data to show how they are #1 or #2 until it is obvious there is a problem, and fixes earlier on do not happen.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
Maybe Asia, but solar is offline across NA, SA, Europe, Africa and Australia for most of the night, as they don't span enough of the solar footprint - especially in winter months.
And yet they have solar installations even in Alaska, where the nights get pretty long. Obviously it isn't much use in the dark months, but they save a lot of money, and conserve their diesel fuel for the times its desperately needed.
The technical issues of utilizing solar are largely overrated, and shrinking constantly.
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
they're cutting production of Gas turbines while Natural Gas production is exploding. That doesn't make a lot of sense. Renewables are nice and all but they're still not dominating our power grid. My guess is this is more to do with a weak global economy for the working class leading to less demand for power. The switch to LED bulbs isn't helping either, or energy efficient devices in general. Again, less demand for new power. This are either politically sensitive or long term structural things, neither of which GE is going to be keen to talk about. Just keep telling everybody that it's just because of a switch to renewables becuase hey, GE can fix this by switching themselves, right?
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What will it do to GE when I implement my program to transition our $2Bn/year Conservation Reserve Program farm subsidies to a Conservation Reserve and Energy Production Program?
I plan to protect our reserve agricultural land--land on which we pay farmers to not farm--by placing non-permanent (no paving, no poured foundation) solar installations. Piles hammered into the ground or footed in concrete piers (removable with a shovel), metal conduit, panels mounted on the racks. We subsidize the farmers now, and I plan to push them to spend (say) 50% of that subsidy on the development of solar capacity. If their reserve land is full, then we give them only half the subsidy.
This will encourage farmers to hire tenant solar management, having generation capacity placed in sunny areas and preventing the permanent destruction of that agricultural land. The farmer profits from this generation, plus receives half the usual subsidy. The American people get something for the money they pour into this subsidy (granted it's like $13 per taxpayer per year), that being cheap renewable energy. If we need the farm land back, we can have a crew yank the poles out of the ground and store the panels and conduit--in such a crisis of farm land shortage, the government would subsidize the change back, of course.
Think of the fossil fuel market, though. With all this new capacity—a billion dollars's worth of installation per year!—we'll be competing against coal, oil, and gas combined cycle. It's under a dollar per megawatt capacity installed, so 1,000 TW or 1 petawatt of generation capacity. The US is already adding wind and retiring coal and natural gas. Our current consumption is about 4 petawatt-hours per year, less than half a TW of continuous generation.
Do you think it's enough solar?
Really, though, I need to think about that. We may need to slow that down. That's a hell of a fast change-over and cutting the rug out from under that many working Americans that fast will make it difficult for them to find new jobs.
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U.S. exports coal too, and that has been *growing* since 2016. A lot of the world's electricity comes from coal and will for years. Here in my state half the electricity comes from nuclear, and 40% from coal. I agree that carbon pollution is bad, but that's the way it is.