General Electric plans to cut 12,000 jobs in its power business as the company’s new leaders look to slash costs and stabilise the beleaguered manufacturer.
The reductions, accounting for about 18 per cent of GE Power’s workforce, include both professional and production employees, the company said on Thursday. The world’s largest maker of gas turbines said the unit needs to become leaner as customers turn away from fossil fuel-based energy sources.
While GE didn’t specify where the job cuts will come, the bulk will be outside the US, according to a person familiar with the matter who asked not to be identified. Positions in France won’t be affected due to stipulations in an agreement when GE bought Alstom’s energy business in 2015, the person said.
"This decision was painful but necessary for GE Power to respond to the disruption in the power market," said the division chief Russell Stokes. "Power will remain a work in progress in 2018. We expect market challenges to continue, but this plan will position us for 2019 and beyond."
The moves, coming as GE also reassesses spending in areas such as research and development, add to a flurry of cost cuts by the chief executive John Flannery, who has already scaled back use of corporate jets and delayed work on a new Boston headquarters since taking the reins in August. GE said last month it would pare the quarterly dividend and sell some businesses.
Trimming the workforce will help GE achieve its goal of slicing US$1 billion of structural costs next year in the power division. That plan is part of a larger effort to cut $3.5bn of expenses across the company through 2018.
The shares climbed less than 1 per cent to $17.74 before regular trading in New York after falling to the lowest in almost six years on Wednesday. GE has plunged 44 per cent this year - easily the worst in the Dow Jones Industrial Average, which has climbed 22 per cent.
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Read more:
GE stock drops as profit misses forecast
GE improves cash flow as Immelt prepares to depart
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Demand is flagging for GE’s power-generation equipment because of overcapacity, lower utilisation, fewer outages and the growth in renewable energy, said the Stifel Financial analyst Robert McCarthy.
“Given the challenges within the global power market, today’s announcement represents an obvious next step in reducing headcount and footprint in order to improve margins and cash flow within the struggling business,” Mr McCarthy said in a note to clients. “Traditional power markets including gas and coal have softened and volumes are down significantly.”
GE had about 300,000 employees across its operating units at the end of last year. Power was the company’s biggest division, with sales last year of $26.8bn. The total would have been $36.8bn after accounting for the effects of a reorganisation this year in which GE added some energy businesses to the unit.
The manufacturer has been hit hard by weakening demand for electricity generated with natural gas, in part due to a shift toward power from renewable sources. In addition, “we have exacerbated the market situation with some really poor execution”, Mr Flannery told investors last month.
The power unit expanded considerably with the $10bn Alstom acquisition, but the drawn-out deal has turned into a drag. Intended to broaden the product lineup with steam-turbine technology, the tie-up pushed GE Power’s workforce to 65,000 at a time when the market was slowing.
“Alstom has clearly performed below our expectations,” Mr Flannery said last month, referring to the assets acquired from the French company.
As the size of the hurdles became clear this year, GE made changes to management in the power business and reorganised divisions. Mr Stokes was named head of GE Power in June, taking over from Steve Bolze, who left the company shortly after Mr Flannery was named to succeed Jeffrey Immelt as GE’s next CEO.
Online message boards for GE employees were active in recent weeks as workers discussed lay-off notices going out in GE Power manufacturing locations such as Greenville, South Carolina, and Schenectady, New York. GE also met with union representatives in Europe this week to discuss cutbacks there.
Company%20Profile
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Company%20Profile
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BORDERLANDS
Starring: Cate Blanchett, Kevin Hart, Jamie Lee Curtis
Director: Eli Roth
Rating: 0/5
The%20specs
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TEACHERS' PAY - WHAT YOU NEED TO KNOW
Pay varies significantly depending on the school, its rating and the curriculum. Here's a rough guide as of January 2021:
- top end schools tend to pay Dh16,000-17,000 a month - plus a monthly housing allowance of up to Dh6,000. These tend to be British curriculum schools rated 'outstanding' or 'very good', followed by American schools
- average salary across curriculums and skill levels is about Dh10,000, recruiters say
- it is becoming more common for schools to provide accommodation, sometimes in an apartment block with other teachers, rather than hand teachers a cash housing allowance
- some strong performing schools have cut back on salaries since the pandemic began, sometimes offering Dh16,000 including the housing allowance, which reflects the slump in rental costs, and sheer demand for jobs
- maths and science teachers are most in demand and some schools will pay up to Dh3,000 more than other teachers in recognition of their technical skills
- at the other end of the market, teachers in some Indian schools, where fees are lower and competition among applicants is intense, can be paid as low as Dh3,000 per month
- in Indian schools, it has also become common for teachers to share residential accommodation, living in a block with colleagues
COMPANY%20PROFILE
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Company Profile
Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million
The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
Company%20Profile
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COMPANY%20PROFILE
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Company%20profile
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COMPANY%20PROFILE%20
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BEETLEJUICE BEETLEJUICE
Starring: Winona Ryder, Michael Keaton, Jenny Ortega
Director: Tim Burton
Rating: 3/5
The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
Company%20Profile
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The%20specs
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Israel Palestine on Swedish TV 1958-1989
Director: Goran Hugo Olsson
Rating: 5/5