Three key points after the expected increase in job losses at GE
GE or General Electric is planning more job cuts within their Aviation division. We have analysed the latest news and here are three key points we noted about the future from it
GE has always been a major player within the American Economy. With recent financial struggles due to problems within their financial services and its core power business in 2018. This led to an overhaul in the management of the company. A management that does not want to see the business in trouble again.
Here are key points that we believe we can take out of the most recent job cut publication:
Not lean enough
Even after a massive reduction in headcount of 25% of the business, General Electric believes that they are not lean enough. Anticipating further pressure on revenue, and trying to mitigate it with a reduction in costs for the short to medium term.
It is expected that revenue and profits will be significantly lower than the prior year and to what was expected. The decision then to downscale or rightsize the business further makes perfect sense.
The Aviation Industry will not spontaneously recover
Even with increased optimism about a vaccine and mostly relaxed rules around travel, the majority of GE’s job cuts would be in their Jet-Engine business. With the Aviation divisions new boss John Slattery indicating that the business unit will need to reduce in size over the next 18 months. Indicating that GE anticipates no real recovery within the industry for the short to medium term.
Faith in Management restored
Investors found the news reassuring, as management is trying to manage the current situation in a way that is beneficial to the overall sustainability and longevity of the entire business.
With GE’s third-quarter results showing a decline in revenue, but also a decline in the loss made compared to the second quarter. This indicates that Management was able to identify the issues and make the hard decisions early enough to ensure overall sustainability.