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General Electric announced on Thursday it was axing 12,000 jobs at its global power business as the struggling industrial conglomerate responds to dwindling demand for fossil fuel power plants.
The U.S. company launched the cuts to save $1 billion in 2018, saying it expected current difficulties in the sector to continue.
“Traditional power markets including gas and coal have softened,” GE said.
Rumors of sweeping job cuts were confirmed by labor union sources on Wednesday, with staff in Switzerland and Germany among those badly hit.
“This decision was painful but necessary for GE Power to respond to the disruption in the power market, which is driving significantly lower volumes in products and services,” said Russell Stokes, head of GE Power.
“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.”
A third of the company’s Swiss workforce face layoffs, while 16 percent of its staff in Germany are also likely to be axed in the shake up.
GE said it had begun talks with labor leaders about the steps.
Demand for new thermal power plants dramatically dropped in all rich countries, GE said, while traditional utility customers have reduced their investments due to market deterioration and uncertainty about future climate policy measures.
Hardly any new power station projects had been commissioned in Germany in recent years, GE said. Heightened Asian competition had also increased price pressures.
Last month, General Electric CEO John Flannery outlined plans to reduce the manufacturing footprint of GE’s power business to respond to a sharp fall in demand for fossil fuel power equipment. GE had not specified how many jobs would be cut or where.
GE rival Siemens is cutting about 6,900 jobs, or close to 2 percent of its global workforce, mainly at its power and gas division, which has been hit by the rapid growth of renewables.