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In Bid To Reduce Costs, GE's New CEO Preparing Job Cuts: Sources


In Bid To Reduce Costs, GE's New CEO Preparing Job Cuts: Sources
In an effort to cut spending and boost profits under its new chief executive, General Electric Co is making plans to significantly reduce corporate staff. The media reported quoting sources that were familiar with the situation that the company already has halted hiring in certain technology positions.
At headquarters and other areas of the company that do not produce revenue or profit, senior-level executives to prepare for cuts by new Chief Executive Officer John Flannery.
“The cutting is going to start and it’s going to be aggressive,” said the source, who had direct knowledge of the discussions.
It was not known how many jobs would be eliminated.
GE declined to discuss details but noted that in March it announced plans to reduce overhead.
“We have a plan to take out $2 billion in cost by the end of 2018,” GE spokeswoman Jennifer Erickson said. “We’ve said John is reviewing all aspects of the company. He will present to investors in November.”
The sources however reportedly told the media that Flannery is not waiting until November to begin making reductions.
Because of the fact that the company is increasing spending in other areas, such as its digital business, GE would need to cut spending by more than $2 billion, analysts have said. With the aim of boosting sales and revenues for its GE Digital and its Predix industrial internet system, GE is also changing financial targets and strategy for those two units.
There has been a fall of 23 percent this year in GE’s stock prices whereas there has also been a fall in its profit and cash flow under former CEO Jeff Immelt which disappointed investors.
After the company’s leaders talked with activist investor Nelson Peltz, whose Trian Fund Management owns about $2 billion in GE stock, GE’s $2 billion cost-reduction target was set in March.
According to the media reports, Flannery would limit the size of its new Boston headquarters in cutting corporate overhead.
It would delay construction of part of its headquarters to save money, GE said earlier this month.
The media reports indicated that the areas like human resources, recruiting, corporate security, helicopter and jet operations, procurement, auditing and possibly finance would be the ones that would be most affected by Staff reductions.
Sources also said that though they would not include people working on Predix and its applications or digital sales, reductions also are expected in information technology, where a hiring freeze is in place.