General Electric Co. disclosed plans on Tuesday to restructure its energy businesses, known collectively as GE Vernova, as part of an effort to save $500 million a year as the company prepares to spin Vernova out as an independent operation in 2024.
The cuts, which will result in about $600 million in restructuring expenses, will take place primarily in GE’s renewable energy group. The cuts were disclosed as part of GE’s third-quarters earnings announcement Tuesday.
In particular, GE’s on-shore wind-energy business is taking a hit. The company said Tuesday that it has experienced significant inflation in materials and logistics costs, and the related price increases have hurt customer demand. Also, the company is looking to pare back the number of markets in which it operates and to simplify its product lineup. GE is also suffering from lower-than-expected volume in key markets, as are several of its on-shore wind rivals.
Overall revenue in GE’s renewable energy businesses dropped 17 percent in the first nine months of the year, to $9.6 billion in the first three quarters of 2023, from $11.5 billion last year.
It is unclear how many jobs will be cut in this restructuring, though GE recently decided to trim the workforce of its US on-shore wind business, by 20 percent, or hundreds of jobs. Similarly, Last week, GE proposed a similar 20 percent cut from its renewable energy business in Europe, 570 positions.
The restructuring efforts are not related to the company’s offshore wind business, where GE is expected to soon start shipping Haliade-X turbines for the Vineyard Wind project south of Martha’s Vineyard.
Boston-based GE is currently in the process of splitting itself into three companies. The first business, known as GE HealthCare, will be spun out in early 2023. A year later, GE Vernova will follow. That will leave aviation, under the GE Aerospace brand, as the company’s remaining manufacturing business.