GE plans to cut 20% workers at onshore wind unit

CHICAGO DENVER General Electric Co is laying off workers at its onshore wind unit as part of a plan to restructure and resize the business, which is struggling with weak demand, rising costs and supply-chain delays, four sources familiar with the move said.

The company notified employees in North America, the Middle East, the Middle-East and Africa about the cuts, according to the sources. It plans to cut its onshore wind workforce at a later date in Europe and Asia Pacific.

The cuts are expected to affect 20 per cent of the onshore wind unit's workforce in the United States, they said. One of the sources said that this would amount to hundreds of workers.

GE has streamlined its onshore wind business in response to market realities, but did not comment directly on any workforce cuts.

A GE Renewables spokeswoman said these difficult decisions do not reflect on our employees' dedication and hard work but are needed to ensure the business can compete and improve profitability over time.

The largest of GE's renewable businesses was onshore wind, which employed 38,000 people worldwide at the end of 2021. The unit has been battling higher raw material costs due to inflation and supply-chain pressures.

The United States, which has been the most profitable onshore wind market in the United States, has been hit by policy uncertainty due to the expiry of renewable electricity production tax credits last year, leading to a fall in revenue this year.

GE is not alone. Wind turbines are not able to make profits due to increased competition due to the COVID 19 pandemic and the war in Ukraine, as governments and companies are calling for more renewable energy in the face of climate change.

After a string of profit warnings this year, Siemens Gamesa unveiled a plan to cut 2,900 jobs, mostly in Europe. Profit at the Danish wind turbine maker Vestas has taken a hit.

The difficulties at GE's onshore wind unit, which accounted for 15 per cent of the company's industrial sales last year, is also affecting the performance of the company's renewable energy business. The company blamed North American onshore wind business for two-thirds of the decline in its second quarter renewable revenue in July.

Analysts expect GE's international onshore wind sales to be challenged due to the high cost structure and the restoration of the tax credit for wind projects to give a boost to demand in North America.

As it prepares to spin off its energy businesses, including renewables, into a separate company in 2024, GE has made turning around its onshore business a priority.

As part of its efforts to improve profitability, the onshore business is trying to reduce fixed costs, which could result in a couple of hundred million dollars of savings next year.