GE will fire 12 thousand people in the energy business

General Electric Co. announced its intention to reduce 12 thousand jobs in its global energy business. This decision was made by an industrial conglomerate against the background of a reduction in demand for fossil fuel power stations, Reuters reports.

Reductions should save the US company $ 1 billion by 2018.

GE noted the decline in “traditional electricity markets, including gas and coal.” The company expects that the current difficulties in this sector will continue.

“This decision was painful, but necessary for GE Power to respond to the downturn in the electricity market, which leads to a significant reduction in the volume of products and services,” said GE Power’s chief Russell Stokes.

A third of the Swiss workforce faces cutbacks, while 16% of its employees in Germany are also likely to be laid off. GE began negotiations with trade union leaders on reductions.

GE said demand for new thermal power plants fell sharply in all developed countries, while traditional consumers reduced their investment because of a slowdown in the market and uncertainty about future climate policies.

In Germany, in recent years, almost no new projects have been launched, GE notes. Meanwhile, increased competition in Asia has strengthened price pressure.

Last month, General Electric CEO John Flannery spoke of plans to reduce the production capacity of GE’s energy sector in response to a sharp drop in demand for equipment for fossil fuel power plants. Then the company did not say how many jobs will be cut and where.

Siemens, a competitor of GE, reduces about 6,900 jobs, or almost 2% of its workforce in the world, mainly in units specializing in electricity and gas. These units have suffered from the rapid growth in the popularity of renewable energy sources.

The revenue of General Electric in July-September was $ 33.47 billion compared with $ 29.27 billion for the same period last year. Analysts polled by Thomson Reuters forecast revenues of $ 32.56 billion.

Net income in the third quarter fell to $ 1.8 billion, or $ 0.21 per share, compared to $ 1.99 billion, or $ 0.22 per share, in the year earlier.

The company’s profit, excluding restructuring expenses and other one-off factors, decreased from $ 0.32 to $ 0.29 per share, while analysts on average expected the figure to be $ 0.49 per share.

“It was a very difficult quarter,” John Flannery said, “Despite the fact that most of our divisions showed high profits, this was offset by a decrease in the Power division in a complex market.”

Revenue of this unit in the last quarter decreased by 4% to $ 8.68 billion.