GE simplifies energy business

GE announced recently that it will reorganize its Energy business into three standalone businesses effective in the fourth quarter of 2012. The Energy headquarters organizational layer will be phased out by the end of 2012. This change is expected to speed up decision making, reduce layers and decrease cost.

(A GE gas turbine)

GE Energy Infrastructure includes approximately 100,000 employees and is expected to have revenues of approximately $50 billion this year. The three new businesses will report directly to GE Chairman and CEO Jeff Immelt.

GE Power and Water, led by GE Senior Vice President and Power and Water CEO Steve Bolze, is headquartered in Schenectady, NY. It is expected to provide full lifecycle solutions for power generation customers, including renewable energy and water processing technologies, with approximately 41,000 employees and planned revenue of approximately $28 billion this year.

GE Oil and Gas, led by GE Senior Vice President and Oil and Gas CEO Dan Heintzelman, is headquartered in Florence, Italy. It is expected to provide equipment and services for all segments of the offshore and onshore oil and gas industry, including turbomachinery and drilling and surface, subsea, and pipeline equipment and services. Its employee strength is estimated to be approximately 33,000 employees and the planned revenue is expected to be approximately $15 billion in 2012.

GE Energy Management, led by GE Senior Vice President and Energy Management CEO Dan Janki, is headquartered in Atlanta, Georgia. It consists of technology solutions for the delivery, management, conversion, and optimization of electrical power for customers across multiple energy-intensive industries, and is likely to have approximately 27,000 employees and planned revenue of approximately $7 billion this year.

Transition during the third quarter

GE will begin reporting separate segment financial results for these three businesses beginning with the fourth quarter of 2012. GE Vice Chairman and GE Energy Infrastructure CEO John Krenicki will oversee the transition to the new Energy structure during the third quarter. During the fourth quarter, he will continue to serve as a GE vice chairman and advisor to Immelt. Krenicki has decided to leave the company at the end of 2012.

Immelt said, “Big companies are always fighting organizational complexity. We are taking action at a time when the Energy business is doing well. The business had a solid quarter with earnings up 13% and has a big backlog of great products. Removing layers is one way to reduce costs and increase our speed, focus and agility in the marketplace so that we serve customers better.”