General Electric Company (NYSE:GE) CEO John Flannery’s cost-cutting plan has sent shock waves across the investor community. The multinational conglomerate is slashing its dividend in half and GE stock investors are panicking. But that’s only part of Flannery’s great restructuring plan. Another part includes cutting jobs, with the latest round of layoffs hitting GE subsidiary GE Digital. The GE Digital layoffs will primarily affect the software division’s sales staff.
GE Digital Layoffs Owed to Declining Revenue
GE Digital is cutting an undisclosed number of positions, reportedly in the dozens.
The ax is expected to fall on about 100 employees within the division, reducing the software division headcount across the Americas. Employees at the San Ramon, California headquarters are, however, expected to bear the brunt of the layoffs.
In the forefront of these GE job cuts are the sales staff who sell GE’s “Predix” industrial analysis software. GE had made a huge investment in Predix, but the software failed to deliver a reasonable return, as customers continued to face technical difficulties with using the tool.
GE Digital, which employs about 13,000 employees, is now revisiting its strategy. In addition to the sales staff, a number of software developers are also being sent home following these job cuts.
The GE Digital layoffs come on the heels of a dismal quarterly earnings report. The conglomerate reported its worst revenue drop in 17 years, while earnings also came out to be nearly half of what the market was expecting. Soon after the disappointing report, GE stock began to tumble as investors preempted dividend cuts.
Their fears were well founded. GE CEO Flannery did, in fact, announce a 50% dividend cut on Monday morning, while also slashing GE’s earnings outlook for 2018.
GE Digital Layoffs Preceded by Additional Layoffs at General Electric in 2017
The latest GE Digital layoffs are preceded by hundreds of other GE job cuts this year, nearly half of which impacted the company’s transportation division. Over 800 employees lost their jobs in GE Transportation layoffs of 2017 so far. Another 350 were jettisoned by GE Power, while over 280 employees were affected in this year’s GE Lighting layoffs. Other divisions, like Aviation and Global Research, also faced similar layoffs. All in all, over 1,700 employees lost their jobs via GE layoffs in 2017.
GE’s financial troubles have been exacerbated, as the global conglomerate became too big to control for its management. In its bid to become a jack of all trades, it ended up losing its mastery in most, if not all, of its trades.
The company chief has now announced his plans to focus on just three of its core units: healthcare, aviation, and power. Meanwhile, the company will do away with its transportation and lighting businesses which, altogether, saw the most job cuts this year.
All these moves are taking place under GE CEO John Flannery, who had been a company insider for three decades before becoming the company chief in August this year.
Soon after getting hold of the company’s reins, Flannery set out on a quest. He wants to lead the 125-year-old giant back on the track of revenue growth. Having seen the ins and outs of the company up close, he seems to know what he’s doing.
CEO Flannery kicked off his cost-saving initiative by cutting bureaucratic layers from the company, beginning with dismissing two vice chairmen, slashing car bonuses for executives, and getting rid of company jets used by these executives for corporate travels.
A company spokesperson has confirmed that the latest GE Digital layoffs are also part of the company’s ongoing restructuring initiative, under which hundreds of GE employees are being sent home in the cost-cutting push.
Chances of additional GE layoffs remain imminent as the company continues to cut costs and downsize. Sadly, GE’s remaining 295,000 employees are set to pay the price of this turnaround.
“General Electric Cuts Dividend by Half and Slashes Profit Goals,” The Wall Street Journal, November 13, 2015.
“GE cutting staff ahead of new CEO’s Monday overhaul: sources,” Reuters, November 10, 2017.
“GE shifts strategy, financial targets for digital business after missteps,” Fox Business, August 28, 2017.