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GE Cuts 12,000 Jobs In Response To Falling Demand For Fossil Fuel Energy (qz.com) 146

In response to the drop in demand for fossil fuel energy, General Electric -- the world's largest maker of gas turbines -- announced plans to cut 12,000 jobs. Quartz reports: Those cuts will mostly come from GE's power division, which makes energy-generation technologies. The reduction will account for 18% of the division's workforce and affect both professional and production employees, the company said in a statement. The majority of job losses will occur outside the U.S., Bloomberg reports. In a statement, Russell Stokes, the division's president and CEO, said disruptions to the power market were "driving significantly lower volumes in products and services." Demand for GE's power-generation equipment has stalled in part because of renewable energy growth, says Robert McCarthy, an analyst at Stifel Financial.

The move is part of a larger restructuring effort under GE's new chief executive John Flannery, who has faced immense pressure to regain the company's footing since taking the helm in June of this year. GE's stock price plunged 44% this year, the worst performer on the Dow, according to Bloomberg. The company aims to cut $3.5 billion of expenses across its divisions by the end of 2018, including a $1 billion cut from the power division.

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GE Cuts 12,000 Jobs In Response To Falling Demand For Fossil Fuel Energy

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  • Holy shit! (Score:3, Funny)

    by Anonymous Coward on Friday December 08, 2017 @05:22AM (#55700429)
    It's a Good Thing(TM) they don't pay any taxes at all, otherwise they'd be in real trouble from their own mismanagement.
  • by Anonymous Coward on Friday December 08, 2017 @05:27AM (#55700439)

    A large part of General Electric's power division consists of the former power division of Alstom that was bought by GE in 2015 for € 12.4 billion. Alstom may have made a much better deal than it seemed at the time.

    • by Z00L00K ( 682162 ) on Friday December 08, 2017 @05:53AM (#55700483) Homepage Journal

      Probably true, but gas turbines can be useful even in green energy sector, so don't count them out yet.

    • Though thousands of employees were added due to this acquisition and others [gerenewableenergy.com], GE is balancing operations to account for the growing market in wind power generation and the tailspin of the natural gas market.

      Natural gas supplies have increased dramatically in the past decade due in large part to innovative fracking technology, and the price of the gas has fallen precipitously. [macrotrends.net]

      Producers are flaring the gas off near producing fields rather than piping it to market.

      • by Anonymous Coward

        Well that's dumb they could have mined bitcoin with the flare gas. /sarcasm

      • Producers are flaring the gas off near producing fields rather than piping it to market.

        I remember hearing something about long ago it was common practice for oil and gas companies to use this gas to run generators. The refineries and drills needed electricity to run so it made sense to burn this gas if they could to make electricity since it was not economical to do anything else with it. This became the norm to the point that these oil and gas companies has a surplus of electricity. These companies wanted to make the best of their resources so they made deals with utilities and businesses

        • Interesting stuff on the electrical generation angle.

          There have been attempts in the past to use the produced gas to power the pumpjacks [youtube.com] and I'm not certain why the vast majority are plumbed into the grid rather than relying on energy produced right at the wellhead.

    • True but their existing power business was already quite large. GE has been a tech leader in turbines for many decades. This shows up not only in power gen, but also in aviation.

      GE's core businesses going forward will be power (stagnant, but a global leader); healthcare (steady as long as people keep getting older); and aviation (continuous steady growth and the jewel in the crown).

      In re the Alstom deal, remember all the hoops Jeff had to go through to get that deal done? Flying to Paris to stroke Macron's

      • GE's core businesses going forward will be power (stagnant, but a global leader); healthcare (steady as long as people keep getting older); and aviation (continuous steady growth and the jewel in the crown)

        I think they do OK in train locomotives. I think them vs. EMD are the largest makers for at least the NA market.

        • The railway business is called GE Transportation, and it is healthy. It's also stagnant, so watch for Flannery to look at selling it off.

    • Under the new tax plan they would get a refund.

  • by DrTJ ( 4014489 ) on Friday December 08, 2017 @05:32AM (#55700443)

    That would be a nice indication of progress of our society.

    However, this might the "public" explanation which looks good in media.

    I can think of two other reasons, which are less flattering for GE; 1) GE fails to be competitive for this type of equipment (for various reasons), or 2) the market for gas turbines shrinks, maybe due to the very high operational costs of gas turbines (they are very expensive to run, for at least electric power generation)

    • I can think of two other reasons, which are less flattering for GE; 1) GE fails to be competitive for this type of equipment (for various reasons), or 2) the market for gas turbines shrinks, maybe due to the very high operational costs of gas turbines (they are very expensive to run, for at least electric power generation)

      2) is exactly what they said. The market for gas turbines is shrinking due to altpower's competitive advantages (they are less expensive to run, for at least electric power generation.) That's not an "other reason", that's the same reason. You're not contradicting them. You are not cleverer than GE.

    • by prefec2 ( 875483 )

      The market is shrinking. Like GE, Siemens, a major competitor of GE, is also reducing their engagement. In addition Siemens is also reducing steam turbine capacities, as turbines for coal and nuclear plants are in less demand.

      • "Siemens is also reducing steam turbine capacities"

        This is a mistake.

        The long-term demand is going to be for high capacity steam or other gas turbines driven by molten salt nuclear reactors and in the meantime steam demand is likely to increase due to an increase in the conventional nuclear fleet.

        Reasoning: Renewables (Wind and solar PV) are a nice scam, but at best and assuming all planning objections are overrriddden so you build everywhere you can, they can collectively only just match the electrical out

        • by prefec2 ( 875483 )

          Ehm no. Renewables are quite reliable. That might be in contradiction to your world view, but fortunately reality is different. However, molten salt nuclear reactors are decades away from any real application and they still have this nasty recycling problem.

          Siemens and GE are for profit corporations. If they see a demand in an area they will invest and expand business there. However, business for these large turbines is going down. This includes steam and gas turbines. Therefore, they reduce capacity. Maybe

          • Renewables are reliable collectively. The problem is production volumes.

            Renewables can just about match existing carbon-sourced electricity production.

            Electricity only accounts for 30-40% of carbon emissions.

            Replacing those carbon using processes with electrical or other sources will result in a 6-8 fold increase in generation requirements.

            How do you propose filling that gap?

            As for the recycling problem: A conventional 800MWe nuclear plant over its 60-year lifespan produces a a lot of high level waste - eno

    • When natural gas prices dropped a few years ago there was a big gas generator construction boom. The power plants are now operational and gas is being consumed as fast as it's being produced, so the demand for new turbines has dropped. Has nothing to do with "greenification".
    • Agreed - the headline could have just as easily read: "Over the last 5 years, GE has failed to adapt to changing market conditions".

      Ultimately, GE's failed to perform. They're saying something that sounds plausible, and is 'du jour', but the truth of it goes back several years when they should have started to develop alternative products. It's not like we've had any drop in energy demand, so "energy' is still a growth market.

  • Sad (Score:2, Interesting)

    by dreamygeek ( 5174861 )
    That's just said and not fair to the employees at all. Fossil fuel was already a risky area to jump in. They should've seen it coming.
    • by AmiMoJo ( 196126 )

      Wouldn't it be great if instead of laying them off they retrained them to build renewable products and invested heavily in the future?

      • by Salgak1 ( 20136 )

        Where's the profit in THAT ?? Disposable, high-maintenance items are good for the bottom line. . . as long as you're selling. . .

      • by Ayano ( 4882157 )
        Retraining is expensive, and there over all would be less jobs in availability. From a business stand point, and given that GE was bleeding money, they needed to cut their losses.

        As an employee, you should always be flexible, and train new skills to keep you market viability, nobody owes you a job, but you're owed an opportunity to have one. Never a guarantee.
        • by AmiMoJo ( 196126 )

          In other words treat human beings as disposable tools to be discarded the moment they no longer suit your needs.

          • by Ayano ( 4882157 )
            ? If I worked at a bronze mill hypothetically, and a new steel mill opened using new technology that I refused to learn about on my own. When my plant starts to upgrade, and is refocusing on steel milling procedures and practices....

            Am I owed a job? I'm owed an opportunity to a job, and if the company can afford retraining that can help me, but I can't -- expect -- to receive retraining. Those who trained on their own are immediately more valuable as they have the skills without having to be trained. Not
      • Wouldn't it be great if instead of laying them off they retrained them to build renewable products and invested heavily in the future?

        Thanks, I needed a good laugh on a dull Friday afternoon.

      • I'd bet a bitcoin that GE is doing R&D into renewables.

        (Googles it)

        1980 at least. [wikipedia.org]
      • What about the engineers who are already unemployed? Don't they get a shot at getting back on their feet?

        What we really need is some kind of social safety net [johnmoserforcongress.com] that helps keep these people stable while they transition through the turmoil of economic change, and gives them a portion of our new growth--because they're unemployed, yes, and they got that way by being in the path of progress. Thanks for keeping the lights running for us all these years, and now your time is over; find somewhere else to be--ma

  • The main issue with solar and wind, the main replacements for fossil fuels, is that their output is affected by weather conditions. What this means is that you either need to produce a surplus when weather conditions are good and store that energy in batteries or you need to have energy generation capacity that can be turned on and off as needed. While Musk has been touting his batteries for storing surplus energy, the main way to counter fluctuations in output has still been to have power stations with die
    • Natural gas is a fossil fuel, that is cheaper to extract, burns cleaner than coal, and is plentiful, and in general requires less workers to extract than coal or oil.
      • Natural gas is a fossil fuel, that is cheaper to extract, burns cleaner than coal, and is plentiful, and in general requires less workers to extract than coal or oil.

        You have the gift of understatement! Anyhow, that's spot on. Natgas is a transition fuel, and a cleaner alternative until the technology involved in the alternatives is more mature.

        Some folks look at it as the devil itself, but this will allow humans to transition to clean energy without distrupting the word's economy.

    • The main issue with solar and wind, the main replacements for fossil fuels, is that their output is affected by weather conditions

      In the area I live in, we use a lot of wind power. Enough power that depending on demand, turbines will switch on and off to meet it or reserve their output.

      And where they are, the wind is basically constant. This is along the Allegheny Front. Which has a huge influence on weather patterns. It can be a still hot day down here in the valley, but the turbines still turn.

      Solar is certainly feasible, but at the moment it is more on the individual scale, which I really like. Off-gridding, and yeah, storage

    • You need something like a capacitor. Maybe Recouperative Compressed Air Energy Storage.

      • Compressed air falls to Boyle's law - in both directions.

        What I mean by that is that when you compress gas it gets hot - and at the pressures involved for storage that can be enough to damage components/piping, so you have to toss heat overboard. You'll want to do this anyway to reduce the pressures.

        When you decompress it, it gets cold, and cold gas has lower volume, so you lose out substantially on the entire pressurisation cycle (this is why compressed gas cars are a scam)

        Recuperation systems (storing the

        • Recuperation systems (storing the compression heat and reinjecting it upon decompression) are a nice idea but not practical - some quick calculations of the energy involved will point to the volumes of well-insulated thermal storage required being "difficult" at best at multi MW scales.

          I said the same thing about electric cars.

          There's a thousand-mWh adiabatic CAES plant in Germany, with around 300MW output capacity, but it's lagging: the plant was supposed to come online in 2016. It hasn't been canceled, and they still claim they're going to bring it up with about 70% efficiency (practical peak efficiency should be around 90%, with theoretical at 100%, but this plant won't do that).

    • by amorsen ( 7485 )

      power stations with diesel generators

      No. Just no. Diesel generators are fine for backup for a data center, they are useless for grid use. Oil is just too expensive for that kind of thing.

      • Diesel generators work quite well on natural gas(*) and are more efficient than open cycle turbines, plus handle variable loading better. That's why many utilities keep their ancient creaky standby diesels maintained even though they're only run a few times per year.

        (*) Dedicated gas engines are more optimised for this use but diesels can be adapted with only a slight loss of efficiency. It's cheaper to adapt than install new engines for the amount of work these engines are now doing.

  • by Anonymous Coward

    Too bad, huh? Clinton was such a globalist, right?

  • other work? (Score:4, Insightful)

    by sad_ ( 7868 ) on Friday December 08, 2017 @06:42AM (#55700581) Homepage

    Maybe they can all find work in companies working in the renewable energy sector? Like this one: https://www.gerenewableenergy.... [gerenewableenergy.com]

    • GE is one of the worlds leading suppliers of wind turbines. I think the problem here is that they already have all the people they need working there.
  • by Anonymous Coward

    1) growth rate of demand is down. Historically, the US could rely on an average 2% growth of peak load a year. That pattern halted in 2007, thanks to the economic downturn plus energy efficiency plus load response programs. In 2017 we have only matched 2008 peak load in the US.

    2) extended life of existing plants. In a regulated industry, you overhaul a couple of times and replace with new tech. With deregulation, everyone is squeezing life and extra MW out of everything

    3) increased renewable. Wind an

  • by Anonymous Coward

    Green power can't be the cause. Trump is bringing back the coal jobs!

    • U.S. exports coal too, and that has been *growing* since 2016. A lot of the world's electricity comes from coal and will for years. Here in my state half the electricity comes from nuclear, and 40% from coal. I agree that carbon pollution is bad, but that's the way it is.

  • Natural Selection (Score:5, Interesting)

    by ytene ( 4376651 ) on Friday December 08, 2017 @07:48AM (#55700727)
    This is the Corporate equivalent of Darwin in Action.

    There have been so many indicators of a shift away from fossil fuels that no company operating in that market sector - and certainly not a company as large or well established as GE, can have any excuse for not being aware of this fact.

    The failure of GE to anticipate this market shift and adjust their corporate strategy to accommodate it would be the responsibility of John Flannery's predecessor, Jeff Immelt and the board of Directors that he led. Whilst unforgivable, it is certainly not the first time that we've witnessed such corporate hubris. Look at what happened to Kodak as a result of the "digital revolution" for example.

    The most egregious aspect of this story is the one that doesn't seem to be explored properly: the fact that 12,000 people have lost their jobs because of utterly incompetent management. And what happens to those incompetent managers? In the case of Immelt, at 61 he stepped down from the CEO role and planned to continue as Chairman to the end of this year, but got pushed out of that by Flannery on October 2nd. Not a moment too soon, looking at this mess. So Immelt will cruise into retirement with a massive 401k, not to mention all the stock options he's had over the years. A shame that 12,000 families are now going to pay the price for his incompetence.

    I'm sure that they are different at a detail level, but at a *scale* level there have to be parallels between the manufacture of turbine blades used in fossil fuel power generation and the technologies used for wind or hydro power generation. Why didn't GE begin a ramp-up into those emerging technologies when they had the time and revenue to carry it? This article headline should have read, "Over the last 18 months, GE have switched 12,000 Jobs from Fossil Fuel to Renewable Energy Technologies".

    The fact that it doesn't should herald a managerial bloodbath, and the installation of a competent board of directors. Meanwhile, back on Planet Earth...
    • Re: (Score:2, Informative)

      by Anonymous Coward

      In fairness to GE, in the power space we're faced with basically a freeze on new power generation capacity. It's hard enough to replace what we're retiring, but new plants are subject to so much political scrutiny. One side wants the cleanest per kWh, the practicality and the pollution caused in construction be damned; the other seems to want the dirtiest possible power as a form of perverse value signalling to their horribly misinformed base.

      The result is that nothing much gets built, and when it does it's

    • "Over the last 18 months, GE have switched 12,000 Jobs from Fossil Fuel to Renewable Energy Technologies".

      GE or no GE the jobs switched to renewables. If GE is not there, some other renewable company will employ them.

    • by Anonymous Coward

      GE already makes wind turbines. You might want to look it up before posting.

      GE fully anticipated this because sales in fossil fuel power generation products and services has been stagnating for a while. They are just cleaning house to remove deadwood and do some early retirement.

      I assure you they will be selling gas turbines and steam turbines for several decades more at least. There is no reason to believe renewables will grab more than 10% market share right now, and Americans do like their electricity

    • Re-structuring excuses. GE starting layoffs like a year ago. I know my city lost several hundred jobs already before this announcement. This is merely justification to continue.

      Are gas turbines all that different from wind turbines? Scale to be sure, and the component that burns fuel. In the end it is a spinney magnet that generates electricity.

    • they're cutting production of Gas turbines while Natural Gas production is exploding. That doesn't make a lot of sense. Renewables are nice and all but they're still not dominating our power grid. My guess is this is more to do with a weak global economy for the working class leading to less demand for power. The switch to LED bulbs isn't helping either, or energy efficient devices in general. Again, less demand for new power. This are either politically sensitive or long term structural things, neither of
  • GE is probably making some room in the budget for even bigger bonuses for execs.
    Not paying any taxes was not leaving enough in the kitty.
    No worries, however, all of those laid off can find jobs in solar, if they want to see if the PRC is willing to pick them up.
    • Actually, executive cash compensation in large companies amounts to very little per employee. At Sinclair, it's $112 per employee per year for the CEO; at Ford, it's $22.50, or around $65 if you only count American employees.

      At GE, the CEO gets $33.03 per employee per year. If they just made the next round of wage raises 1 penny lower for everyone—you get $1.99/hr more this year instead of $2/hr—they could pay out $5.9 million in additional executive bonuses.

      • Interesting, seems almost reasonable except there are hundreds if not thousands of real world cases where executives used lay offs to meet goals and justify performance bonuses.
        Also some studies show that layoffs are tied to executive compensation.
        Study Finds CEO Salaries Increase With Layoffs [truth-out.org]
        • Potentially true, for performance-related reasons; however, that doesn't tie the lay-offs to making room in the budget.

          Generally speaking, if your layoffs eliminate employees who produce more revenue than their payrolls, you're losing profits. Layoffs are a legitimate and important part of business when your business fails to expand to take advantage of new market opportunities; it's cheaper and more-efficient to instead transition your existing employees into new roles, as that retains a lot of organiza

  • Which is false (Score:4, Interesting)

    by WindBourne ( 631190 ) on Friday December 08, 2017 @08:55AM (#55700981) Journal
    China is building 700 new coal plants in China and around the world over the next 5 years. The technology is what GE gave them. However, in America, we stopped im-ex bank supporting building coal plants. Otoh, China doubled down on it and there is adding another 43% more coal plants than exists today.
    • but will the Chinese be using GE turbines for that which is to be built, or will they do their very typical thing of reverse engineering turbines they've bought in the past so they can make their own in the future. I'm betting on the latter

    • by Anonymous Coward
      And how many old ones are they closing? You also always forget to mention that they are all more efficient and cleaner than all the coal plants in the US. Idiots like you are surprised that growing economies have growing demand for resources, but stagnating ones like the US don't need too. All their pollution already happened, their high numbers are just accepted for some reason.
    • by trawg ( 308495 )

      It seems many of the formerly planned coal plants have been suspended or cancelled [reuters.com].

      • that was from may which is 7 months ago. Their are still over 700 plants being built as of Nov 2017 which is 1 month ago. And note that these are being BUILT, not just planned.
    • China is also building shedloads of nuclear plants.

      The coal plants being built are mostly to handle immediate demand or to replace older inefficient ones. Either way the intent is that they won't be running for 60-70 years.

  • Look, your old fossil fuel energy is .. just plain overpriced and inefficient.

    It's hard to transport without explosions.

    It requires capital investments that only last a few years and then get thrown away.

    Meanwhile, renewables like solar wind and biofuels tend to last 20-100 years in operation, can be easily moved, don't explode, kill far fewer animals and birds than all fossil fuels do, and don't endanger expensive urban areas with giant explosions that kill thousands and destroy billions of dollars of inve

  • Thatâ(TM)s right. Forward thinking companies did that first. Dinosaurs died out for a reason. So do dinosaur companies.

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