General Electric to axe 12,000 jobs in painful shift to renewables focus

General Electric (NYSE:GE) is axing 12,000 jobs across its global power sector as it looks to streamline its business away from fossil fuels and towards renewable energy.

The struggling industrial conglomerate aims to save US$1 billion in costs next year through the severe jobs cuts, which represent almost a fifth of its global workforce in the power division.

Freshly-appointed chief executive John Flannery recently revealed plans to shrink GE’s sprawling business empire built up by predecessors Jeff Immelt and Jack Welch, who favoured the strategy of spreading risk across several sectors.

In a statement following the announcement, GE acknowledged that interest in the fossil fuel-based energy has waned in recent years. “Traditional power markets including gas and coal have softened,” said the firm.

This admission comes only two years after the company spent $10.7 billion on French energy business Alstom, whose portfolio was primarily comprised of natural gas, coal and nuclear power.

GE pointed to the growth of the renewable energy industry as a factor in its decision to cut jobs, while GE Power CEO Russell Stokes called the move ‘painful but necessary’ to adapt to the market.

Renewable forms of energy are expected to generate more electricity than coal worldwide by 2040, but while GE has a significant wind power division, it faces fierce competition in the budding industry from companies such as Vestas Wind Systems.