General Electric considers disbandment and will sell GE Power operations to Schenectady – The Daily Gazette

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BOSTON – General Electric on Tuesday announced plans to separate, forming three separate companies that can each focus on their own strengths and efficiencies.

The GE Power activity, which has a major presence in Schenectady, would be created as a new company, just like the Health activity, leaving only the Aviation activity to continue under the name of “General Electric”, one of the most famous names in America. industry.

All three would be independent companies listed on the stock exchange. Shareholder approval for the plan is not required, and there would be no tax liability for shareholders as a result of the move.

GE has a few thousand employees in the capital region, most of them on GE Power’s sprawling campus in Schenectady and Rotterdam or at GE Research’s perched headquarters in Niskayuna. A much smaller number work in a medical imaging plant in North Greenbush. The company does not release specific figures for its facilities, of which there are around 20 in New York state.

The Schenectady / Rotterdam and North Greenbush sites are both reportedly part of the fallout from the plan presented on Tuesday. GE Research would continue to be part of the new General Electric, a spokesperson said.

The spokesperson also said that no employee impact is expected at any facility in the capital region, at least two of which have seen a significant number of job cuts in recent years.

The split plan announced on Tuesday morning is a continuation of a long-term divestment and rationalization process that the losing company undertook as it tried to survive financial problems that reached a crisis point these days. last years.

The electric company formed by Thomas Edison in 1892 evolved into a conglomerate that made everything from washing machines and jet engines to locomotives and MRI imaging equipment.

One of these new lines of business, finance, took GE to unprecedented heights and made it the most valuable company in the world for some time, but underlying issues within GE Capital continued to grow. are posed during the Great Recession and its aftermath. This crisis, and more recently the COVID pandemic, has led to profound changes within the company.

GE Aviation, which will become the new GE, was General Electric’s most profitable business before the pandemic and the company has high expectations for its future.

REACTION

In a call with industry analysts on Tuesday, GE CEO H. Lawrence Culp Jr. presented the plan as a defining moment in the company’s history, a continuation of years of reorganization by him. and its predecessors. He expects to spend around $ 2 billion on the split process, plus around $ 500 million for the resulting taxes.

The news of the breakup was well received, if not exuberant. Many analysts quoted in the financial media take a positive view of it, with at least one calling it the way of the future for other conglomerates.

GE stock hit a 52-week high during Tuesday’s session, but stabilized and closed only 2.65% higher in much heavier-than-average trading. The Nasdaq index as a whole closed 0.6% lower on average.

UIE-CWA Local 301, the union representing GE production workers in Schenectady, is looking for ways to increase production locally after the spin-off – which is essentially the same quest it has been pursuing ever since. years without lasting success.

“We really hope the best for Schenectady and that we can get more jobs here,” said sales agent Chris DePoalo on Tuesday.

But he said the company’s plans are unclear to him at this point.

“I don’t even know what we’re going to call ourselves,” he said of the GE Power spin-off, which has no name at this early stage.

Local 301 once organized tens of thousands of GE workers in the Electric City. There are only 800 left, of which only 600 at the GE plant in Schenectady.

The union recently lobbied for new production lines in Schenectady, especially wind turbines.

It will continue.

“We are here fighting left and right for the job,” DePoalo said.

LOCAL IMPACT

What is happening with GE’s fallout in the Capital Region is unclear, as much about GE’s future is unknown or even unknowable at this point.

Healthcare is not expected to be divested until early 2023, and the combination of GE Power, GE Renewable Energy and GE Digital is expected to divest in early 2024.

Until they are separated, they are part of a company that strives to reduce costs and increase revenue and has revised its strategy on several occasions. Just three years ago, GE’s big new comeback plan was to keep energy, aviation and renewables as its three core businesses and to separate out of other businesses.

Once the two spin-offs are completed, the newly independent companies must design their own business plans and must ensure that these strategies are successful. Anything GE predicts or expects today may have little or no impact on those decisions.

A GE spokesperson told the Daily Gazette on Tuesday that there were no planned job cuts in the capital region. Some other answers to The Gazette’s questions:

  • There are no plans to remove the imposing GENERAL ELECTRIC sign from building 37, at the foot of Boulevard Erie in Schenectady.
  • Nothing indicates what will be the new name of the spin-off of GE Power – which will own and will probably occupy the building 37 – but it will not be “General Electric”.
  • GE Research in Niskayuna will continue to be part of General Electric; specific details of GE Research’s interaction with former GE companies are not known at this early stage.
  • GE’s pension plan is funded and secure; its obligations will be distributed among the companies and all employees will keep their accrued benefits.

GE remains an important part of the Capital Region economy, but Schenectady’s days as a corporate city are over.

A long time ago, GE moved its headquarters out of Schenectady and more recently stopped calling GE Power headquarters Schenectady.

General Electric’s workforce at the Schenectady / Rotterdam campus has fallen by around 90% over the past 50 years, and its workforce at Niskayuna has shrunk by an undisclosed but lesser percentage.

Globally, the company has grown from 295,000 employees in 2020 to 174,000 in 2016, or 41%, thanks to a combination of downsizing and business sales. The four-year decrease was even greater within the US borders: 46%.

The domestic slippage is even more significant over time: the company placed its payroll in the United States in December 2020 at 56,000; IUE-CWA placed the national GE workforce at 277,000 in 1989.

But the company remains a key part of the industrial landscape, local and global, and continues to position itself for the future.

Culp noted on Monday that more than a billion patient scans are performed on more than 4 million GE medical imaging devices annually, that GE electrical equipment generates one-third of the world’s electricity, and that engines GE jets power two-thirds of commercial flights worldwide. And he has reduced his debt by $ 75 billion since 2018.

Locally, the GE Jobs webpage lists 84 vacancies in Niskayuna and 97 in Schenectady, mostly engineering, scientific and management positions.

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