General Electric has announced that it will cut 12,000 jobs in the power section of its business, representing 18% of the division’s global workforce according to a BBC News report.
The industrial group says the job losses will be “painful but necessary.” The restructuring is a bid to save the company $1bn in 2018 as demand for power from fossil fuel sources reduces. In the UK, 1,100 jobs will be lost, mainly in Stafford and Rugby sites.
The restructuring will hit workers hard in other European sites; one sixth of the German and one third of the Swiss workforce is to be cut. The plans have been set out by the new GE chief executive John Flannery, who replaced Jeff Immelt in August 2017.
In October, the company cut its profits guidance following a 5% fall in third-quarter earnings to $1.8bn. The disappointing performance was said to be due to weak trading power in the power, oil and gas part of the business.
The company remains the world’s largest industrial business, employing over 55,000 people around the globe. However, structural changes have resulted in some parts of the business becoming less profitable.
Mark Elborne, head of GE operations in the UK and Ireland, said: “These are not proposals we ever make lightly and we understand that this news will be difficult for many people. Unfortunately, we believe that these changes are necessary to ensure that we can remain competitive and secure the future of GE Power in the UK.”