General Electric (GE) plans to cut 1,044 jobs in its power division in France, according to a Reuters report on May 28. The decision was made due to falling worldwide orders for the company’s turbines. General Electric is looking for ways to lower costs and make its operations more efficient across the struggling power unit in France.
Reuters revealed that the company has already kicked off negotiations with French unions. According to the report, the job cuts would be from the Belfort site, which General Electric got after acquiring Alstom Power Systems in 2014.
A total of 4,300 people work for General Electric at the Belfort site, which handles nuclear, hydro technology, steam, and gas power. About 792 personnel at the gas power unit could get a termination letter. The company plans to lay off another 252 employees in support positions.
French government objected
General Electric will likely face similar criticism from the French government like it received in January and February. Earlier this year, the company announced its plan to reduce the workforce by 468 across its power division in France. Reuters reported that after the company’s announcement on May 29, French Finance Minister Bruno Le Maire said “he would fight to save jobs.”
Notably, the recent job cut plan at Alstom is in contrast to General Electric’s previous commitment to the French government. The company agreed to maintain jobs for at least three years and add 1,000 jobs by the end of 2018. According to Reuters, in 2017, the French government threatened the company with fines if it didn’t meet the commitment.
In February, the French government fined General Electric $56 million for failing to keep the job creation promise it made during the acquisition of Alstom Power Systems. General Electric has a total workforce of 16,000 employees in France. Among the employees, 6,000 are in General Electric’s power division.
The Industrial Select Sector SPDR Fund (XLI) has allocated 3.7% of its funds in General Electric stock. The ETF has also allocated funds in Honeywell International (HON), United Technologies (UTX), and 3M Company (MMM) of 5.5%, 4.9%, and 4.4%, respectively. XLI has returned 13.5% in 2019. XLI has outperformed the Dow Jones and the S&P 500’s gains, which have risen 8.7% and 11.8%, respectively.