General Electric to cut 2,500 workers
Bloomberg News Service
FAIRFIELD, Conn. — General Electric Co., the biggest maker of power plant equipment, plans to cut 2,500 jobs at its Power Systems unit over the next nine months as sales of large turbines and other generators fall.
The cuts represent 6.8 percent of the unit's work force and will affect employees in Greenville, S.C.; Schenectady, N.Y.; and Pensacola, Fla., the company said in a statement.
GE Power, with $20.2 billion in sales last year, is General Electric's biggest industrial unit. Sales had more than doubled in the past two years. The unit said earlier this month that it will spend $140 million in the third quarter as part of a plan to cut costs as power-plant builders and power-generation companies cancel or defer orders sooner than expected amid the weak economy.
"You're seeing it across the board with power generators," said Miles Berryman, who helps manage about $2 billion at J.P. Morgan Chase & Co. in London, including General Electric shares.
General Electric has said it expects to trim $1 billion in costs at the unit. More job cuts may be announced at the end of 2003 as volume slows, the company said yesterday.
The cuts will be a combination of early retirements, layoffs and attrition, General Electric said. GE Power Systems has forecast large gas turbine shipments to decline by at least 80 percent over the next two years.
About 1,000 jobs will be shed in Greenville, another 1,000 in Schenectady, and 500 elsewhere, General Electric said. Wind turbine blades will now be produced in Pensacola and some operations that make generators there will be moved to New York.
Employees will get at least 60 days notice under contract terms and are also eligible for severance benefits, counseling and job placement programs, the company said. GE Power Systems employs 36,500 people and is based in Atlanta, the company said.
General Electric has said power systems revenue and operating profit will peak this year at $23.5 billion and $5.9 billion, respectively. That will decline to $21.3 billion and $4.4 billion next year; $19 billion and $3.6 billion by 2004. Service and new businesses such as wind turbines will help push sales to $21.3 billion and profit to $4.4 billion by 2005.
Other power-generation equipment makers have also predicted a decline. United Technologies Corp., for example, said sales of its smaller aero-derivative power generation equipment dropped 95 percent in the second quarter. Caterpillar Inc. has also predicted a decline. Germany's Siemens AG, which competes with General Electric in large gas turbines, is expected to report results and forecasts today.
General Electric, the world's biggest company by market value, has about 310,000 employees. Its shares fell 86 cents to $24.80.
