As renewable energy prices have plummeted, there’s been an accompanying drop in demand for fossil fuel energy. The market shifts have taken a toll on the world’s largest maker of gas turbines, General Electric, which today (Dec. 7) announced plans to cut 12,000 jobs.
Those cuts will mostly come from GE’s power division, which makes energy-generation technologies. The reduction will account for 18% of the division’s workforce and affect both professional and production employees, the company said in a statement. The majority of job losses will occur outside the US, Bloomberg reports.
In a statement, Russell Stokes, the division’s president and CEO, said disruptions to the power market were “driving significantly lower volumes in products and services.” Demand for GE’s power-generation equipment has stalled in part because of renewable energy growth, says Robert McCarthy, an analyst at Stifel Financial.
The move is part of a larger restructuring effort under GE’s new chief executive John Flannery, who has faced immense pressure to regain the company’s footing since taking the helm in June of this year. GE’s stock price plunged 44% this year, the worst performer on the Dow, according to Bloomberg. The company aims to cut $3.5 billion of expenses across its divisions by the end of 2018, including a $1 billion cut from the power division.
GE wasn’t the only major player caught unprepared for a market adapting to the realities of climate change. Last month, GE’s German-based competitor Siemens announced it would cut 2% of its global workforce, amounting to 6,900 jobs, in response to governments and companies shifting from fossil-fuel power plants to renewables. Both Siemens and GE expected demand for natural gas to make up for falling interest in coal, but that hasn’t happened fast enough, reports the Wall Street Journal.