At first glance, the job numbers sure look dire for General Electric. The company shed some 78,000 jobs in 2019, an eye-popping 28 percent decline. Global employment is now down to “only” 205,000.
GE apparently hasn’t been this size in decades: The Wall Street Journal reported that the last time the company had a workforce in the 200,000 range was all the way back in 1951.
But look a little deeper into GE’s annual report, released Monday, and the picture is one of an industrial giant that is finally stabilizing — not one in free fall. GE had been jettisoning operations, in part to reduce its debt and focus on fewer businesses. However, the selling spree launched under former CEO John Flannery and continued under the current chief, Larry Culp, is finally reaching its end.
Nearly all of the jobs hived off in 2019 were due to divestitures, not layoffs. The biggest one: GE’s steady retreat from its Baker Hughes oilfield services company. Nearly 66,000 people worked for Baker Hughes in 2018. But with GE’s stake now below 50 percent, Baker Hughes is officially off the balance sheet — and treated as an independent company. That accounts for the vast majority of the workforce reduction last year. (Culp, in his annual letter to shareholders, said GE is determined to sell its remaining 37 percent stake.)
The transportation division employed more than 9,000 people at the end of 2018. That’s gone, too, having merged with Wabtec early last year, taking all those workers with it. GE employed 3,000 people in its lighting business in 2018. But the Boston-based Current division was sold last year. GE is still seeking a buyer for its US lightbulb business, the last vestige of its consumer products. (GE appliances are now made by Haier, under the GE brand name.)
Meanwhile, restructuring charges have dropped off. They totaled $3 billion in 2017 and the same again in 2018, but fell to $1.3 billion in 2019. Plant closings were responsible for much of the high charges in the previous two years. The portion attributed specifically to workforce reductions, however, fell only slightly last year.
As the dust settles, GE is left with four key divisions: Power, Renewable Energy, Aviation, and Healthcare.
The Power business was hit by layoffs, again, as GE continued to adjust to a slowdown in demand for natural gas turbines. GE also shifted thousands of workers from Power to Renewable Energy last year. Tally them together, and employment in electricity-related operations fell to 81,000, from 82,600 the year before.
GE actually saw job growth in its other two major business lines: Aviation, now its biggest business by revenue, and Healthcare. Employment in health care businesses rose about 4 percent, to 56,000, while aviation climbed 8 percent, to 52,000.
Some of this was due to Culp’s intentional relocation of managerial jobs out of GE’s corporate structure and into the business lines.
But winning new contracts also played a role. One local example: a new contract to supply engines for the Army’s Black Hawk and Apache helicopters that is adding hundreds of jobs at GE’s aviation plant in Lynn.
Only about 250 people work at the Boston headquarters, about the same as when GE first relocated here from Fairfield, Conn., in 2016. That said, GE has dropped its twin promises to eventually employ 800 people here and to build a 12-story tower in Fort Point, and has given up the state and city subsidies that had once been pledged to the company in return. Instead, it settled into a more modestly sized new home, in two renovated brick buildings, in December.
The divestitures are almost done now. An unspecified number of health care employees will leave this year, if all goes according to plan, when Culp’s old company, Danaher, completes its $21 billion acquisition of the BioPharma business. And GE still wants someone to buy all those lightbulbs.
More layoffs could be coming. Nick Heymann, an analyst at William Blair & Co., expects Culp to tighten the budget in Renewable Energy this year after squeezing jobs in the gas turbine biz. Culp hinted at as much in his annual letter, saying he wants to see turnarounds this year in its grid solutions and hydro businesses.
For a chief executive like Culp, known for restlessly searching for efficiencies, the restructuring charges and pink slips probably will never truly end. But the relative stability shown in these job numbers should be a good indication that the worst of it is over.