General Electric (GE) has started laying off workers at its onshore wind business unit as part of a strategy to restructure and resize the business.
General Electric’s onshore wind business unit is facing weak demand, rising costs and supply-chain delays, Reuters news report said.
GE’s renewable energy business reported revenue of $5.9 billion and net loss of $853 million during the first half of 2022. In 2022, GE does not expect a step-up in profit in Renewable Energy in the second half due to additional U.S. Onshore demand pressure, inflation, and fleet durability actions, GE said in July 2022.
GE has informed that orders decreased 3 percent to $3.1 billion due to pressure in the Onshore Wind equipment market reflecting lower U.S. volume resulting from the PTC expiration, as well as the business’ international selectivity strategy.
GE on Wednesday notified employees in North America, Latin America, the Middle-East and Africa about the job cuts. It also has plans to cut its onshore wind workforce at a later date in Europe and Asia Pacific.
The cuts are expected to affect 20 percent of the onshore wind business unit’s workforce in the United States. This would equate to hundreds of workers.
GE confirmed it was streamlining its onshore wind business in response to market realities but did not comment directly on any workforce cuts.
“These are difficult decisions, which do not reflect on our employees’ dedication and hard work but are needed to ensure the business can compete and improve profitability over time,” a GE Renewables spokesperson said in an emailed statement.
Onshore wind business is the largest of GE’s renewable businesses, which together employed 38,000 people worldwide at the end of 2021. The unit, however, has been battling higher raw material costs due to inflation and supply-chain pressures.
In the United States, which has been GE’s most profitable onshore wind market, policy uncertainty following the expiry of renewable electricity production tax credits last year has hit customer demand, leading to a fall in the unit’s revenue this year.
GE earlier informed that its renewable energy segment margin of (13.5) percent contracted 1,110 basis points reported and 1,210 basis points, driven by lower U.S. volume at Onshore Wind, higher net inflation, and new product costs.
Rival Siemens Gamesa last month unveiled a plan to cut 2,900 jobs, mostly in Europe, after issuing a string of profit warnings this year. Profit at Danish wind turbine maker Vestas has also taken a hit.
The troubles at GE’s onshore wind unit, which accounted for 15 percent of the company’s industrial sales last year, are also affecting the performance of its overall renewable energy business. In July, the company blamed its North American onshore wind business for two-thirds of the decline in its second quarter renewable revenue.
GE has made turning around its onshore business a priority as it prepares to spin off its energy businesses, including renewables, into a separate company in 2024.