General Electric Company (NYSE:GE) is reportedly planning to send home roughly 4,500 if its employees in Europe according to sources familiar with the matter.
The company is reportedly planning to terminate a total of 4.500 jobs in its power equipment unit which it acquired from Alstom about two years ago. Initial reports about General Electric’s potential downsizing were published on Tuesday by French news outlet, Les Echos. The report stated that employees in Britain, Germany, and Switzerland will be affected by the job cut. A union source has also confirmed the job cuts to Reuters and an official announcement should be made before the end of the week.
The official announcement is expected to reveal the numbers though it is expected that they will be similar to the rumored number of job cuts. The latest word from GE stated that the firm has been carrying out a review of its operations. The review will allow it to make sure that the power equipment business is strategically positioned to react to changing market situations in a manner that will facilitate future success.
GE also stated that it had offered a proposal to the European body that covers the legacy Alstom workers. GE Power’s CEO Russell Stokes had announced about a month ago that the company was contemplating trimming its global footprint by roughly 30 percent.
The job cuts are believed to be part of GE’s plan to integrate its power businesses with its energy connections. Nicholas Heymann, an analyst at William Blair stated that the move could be fueled by the company’s cost-cutting plans that will allow it to save $1 billion in 2018 and an extra $500 million in 2019.
“Renewables will not have any reductions because the world is rapidly shifting from fossil to renewables as the cost of temporarily storing power becomes more affordable at $100/Kw for power packs,” stated Heymann.
The weakening power business might have a lot to do with the drastic cost-cutting measures since it has already affected other areas. The weak outlook from the business forced GE to lower dividends by half and it also influenced a lower earnings forecast last month.
GE stock closed the December 5 trading session at $17.76.