There’s no doubt that General Electric’s new chairman and CEO John Flannery is dead serious about trimming the fat within the organization, with a large number of corporate job cuts and research facility shutdowns expected to be announced next month.
Results of a strategic review of GE that will be unveiled in November are expected to include thousands of job cuts the corporate level, as well as the shutdown of research centers in Munich, Rio de Janeiro and Shanghai, as a means of scaling back GE’s global structure.
Excessive corporate travel is also under the magnifying glass: Flannery already pulled the plug on private air travel, grounding GE’s business jet fleet when he took over as CEO in August. That move seems to be well-justified, with The Wall Street Journal reporting yesterday that former GE CEO Jeff Immelt would travel with a second, near-empty backup private jet on some trips to hedge against mechanical delays—not the most budget-friendly practice.
And the cuts aren’t limited to the air—corporate car perks for 700 or so senior GE executives will also be gone by the end of next year, and Flannery has cancelled an annual three-day, invite-only corporate networking retreat in Boca Raton, Florida.
Here’s a look at what media outlets are saying about the thinking behind GE’s cost-cutting moves, why reducing expenses is so critical and what’s next:
- “Asked about the looming changes, the GE spokeswoman said: ‘The company will continue to have an intense focus on our global operations and customer base,’ noting that the company gets 70% of its revenue from outside the U.S. The company is expected to report quarterly results on Friday that include hefty restructuring charges related to the changes, according to analysts.” – The Wall Street Journal
- “GE is under intense pressure to cut costs and end a stock price decline that has erased nearly $80B in value; on the other hand, some of the restructuring moves could suggest to some that the company is in worse shape than previously thought.” – Seeking Alpha
- “General Electric is scheduled to report earnings on Friday, and no one is expecting it to be a quiet day. The industrial giant’s stock has been beaten up this year amid earnings disappointments, management changes and chatter about a possible dividend cut, and its earnings will be dissected for evidence that the worst is behind General Electric—or still to come.” – Barron’s
- “Despite the company’s stock being on a downtrend for most of this year, it is important to note that GE has met and exceeded the EPS estimates in the last 7 out of 8 quarters. GE is a strong performer and has a solid business, which are factors that should reassure investors of the company’s positive future prospects. The company is likely to return to profitability once the restructuring process is completed.” – Stock Traders Daily