GE To Lay Off 4,500 Employees In Europe For Reducing Costs
Zacks Investment Research | Dec 06, 2017 08:30PM ET
According to a Reuters report, General Electric Company (NYSE:GE) is likely to lay off about 4,500 employees in Europe as part of its corporate objective to lower operating costs and improve profitability. Although the company spokesperson declined to comment on the grapevine, an unnamed union source confirmed the veracity of the news.
The job cuts are mostly centered on the power and grid businesses that GE bought from Alstom (PA:ALSO) in 2015 and will affect employees in Switzerland, Germany and Britain. Billed as one of the largest acquisition by GE at about $10 billion, the transaction increased the employee count of the company by approximately 65,000 with the addition of several field offices and manufacturing sites across the world. This significantly increased the operating costs of the company and eroded margins as demand for new power plants waned due to competition from cost-competitive wind and solar systems and higher inventory in the market. Consequently, management was forced to initiate some drastic steps and eliminate redundant positions in order to improve profitability.
The strategic move is also in tune with the broader goal of the industrial goods manufacturer to integrate the energy connections and power businesses with GE Power, seeking to save about $1 billion in costs in 2018 and an additional $500 million in 2019. The latest layoff follows a similar exercise last month, when GE trimmed staff at its interim corporate headquarters in Boston and eliminated about 100 sales positions within the GE Digital division.
The continued reduction in employee headcount is aimed at scripting a turnaround for the 125-year-old conglomerate by reducing operating costs and strengthening its liquidity. Shares of GE have underperformed the Zacks Investment Research
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