Photo: Richard Drew, Associated Press
GE plans to remove 25 % of the 24 000 jobs.
In difficulty, General Electric (GE) announced Monday a comprehensive restructuring plan designed to focus on three activities (aerospace, health and energy) and with thousands of jobs worldwide to reduce costs.
The manufacturer of aircraft engines and turbines, whose market capitalization has shrunk by more than $ 100 billion since January, will also assign its historical activities in the transport (locomotives and diesel engines) and electricity services in the framework of a plan of disposals of assets of $ 20 billion. It will also disengage from the group of oil services us Baker Hughes, of the capital which it owns 63 %, but could not do so before 2019, according to an agreement reached during the takeover of Baker Hughes last year.
These actions will be accompanied by a new cure of austerity measures including thousands of job cuts, but GE has not given the number of jobs affected or the regions concerned, if this is not the subsidiary GE Power, which includes the French Alstom, was going to undergo a significant overhaul to recover from the downturn in the energy markets and adapt to their mutation. GE intends, in the next two years, put it back on the rails this division, which manufactures gas turbines, steam turbines and other generators with a plan of saving a billion dollars for 2018.
And the jobs ?
GE was involved with the French authorities to develop employment in France at the time of redemption of Alstom, a promise which did not prevent him to announce recently the elimination of 350 jobs at GE Hydro. “Alstom is very disappointing,” said on Monday John Flannery, the new ceos in this position since the 1st of August. “We were hoping to get a double-digit growth “, at least 15% per year, “but this will be a” figure, he developed. Then he was asked if he would be willing to meet with the French minister of Economy, Bruno Le Maire, to discuss the social impact of this restructuring, Mr. Flannery replied in the affirmative.
GE plans to reduce 25 % of the 24 000 jobs, in research, in the digital and in the headquarters, said the new financial director, Jamie Miller. An internal source said to AFP that a good portion of these reductions had already been made. The board of directors is not spared : his composition will be increased from 18 members to 12 as of April 2018.
Sign of the gravity of the current situation : GE has halved its quarterly dividend, a first since 2009. “We act in the emergency to make GE more simple and strong in order to create growth and value for shareholders,” said John Flannery.
“GE is still a mess, a real job,” says Scott Davis, an expert in Melius Research. “We have announced bad news, including a reduction in the dividend, but the recovery, this is not for Monday or Tuesday, it’s going to take time,” responded Mr. Flannery, who has the daunting task of reviving an industrial conglomerate into a loss of speed.
Lack of foresight
It is in particular reproached his predecessor, Jeff Immelt, and his team of not having foreseen the drop in demand for equipment and technologies related to the energy and oil and gas in the wake of the plunge in prices of black gold, which is reflected by large stockpiles.
The shift, announced Monday, gives priority to the first three divisions of the group. The aerospace, health care (medical equipment and services) and energy who employed these three 156 000 people by the end of 2016, represented 57,7 % of the total turnover of 123,7 billion this year. The first, which cofabrique the reactor of new generation Leap with the French Safran, is in a very good dynamic, because of the increase in air traffic, which translates into a strong demand for civilian aircraft across the world.
GE, which has sold in recent years Universal studios, the NBC television network, its financial assets and its household appliances, has promised to continue to simplify its portfolio.