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FILE- In this Nov. 14, 2017, file photo, General Electric Chairman and CEO John Flannery is interviewed on the floor of the New York Stock Exchange. Flannery, a longtime insider at GE, was tasked last year with reshaping the company, but the proposed changes at GE have grown more radical over the past several months as negative developments emerge. After cutting the size of its board from 18 to 12 members, General Electric Co. said Monday, Feb. 26, 2018, that a quarter of that board would consist of new members. (AP Photo/Richard Drew, File)
lessFILE- In this Nov. 14, 2017, file photo, General Electric Chairman and CEO John Flannery is interviewed on the floor of the New York Stock Exchange. Flannery, a longtime insider at GE, was tasked last year with
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Specialist John McNierney works at the post that handles General Electric on the floor of the New York Stock Exchange, Tuesday, Jan. 16, 2018. GE CEO John Flannery, who was put in charge of reviving the company last summer, revealed significant issues at GE Capital on Tuesday, which will lead to a $6.2 billion after-tax charge in the fourth quarter. (AP Photo/Richard Drew)
lessSpecialist John McNierney works at the post that handles General Electric on the floor of the New York Stock Exchange, Tuesday, Jan. 16, 2018. GE CEO John Flannery, who was put in charge of reviving the company
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Jeffrey Immelt, chief executive officer of General Electric Co. (GE), listens during an event at the Economic Club of New York in New York, U.S., on Thursday, June 22, 2017. Last week, Immelt announced he would step down as CEO on Aug. 1. Immelt's successor, John Flannery, said he plans to review the General Electric Co. empire he's inheriting, fueling speculation that the $240 billion company is headed for a major slimdown. Photographer: Peter Foley/Bloomberg ORG XMIT: 700071305
lessJeffrey Immelt, chief executive officer of General Electric Co. (GE), listens during an event at the Economic Club of New York in New York, U.S., on Thursday, June 22, 2017. Last week, Immelt announced he would
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John Flannery, president and CEO of GE Healthcare, speaks during a Bloomberg Television interview in New York on Sept. 30, 2016. (MUST CREDIT: Christopher Goodney/Bloomberg) ORG XMIT: 673653023
John Flannery, president and CEO of GE Healthcare, speaks during a Bloomberg Television interview in New York on Sept. 30, 2016. (MUST CREDIT: Christopher Goodney/Bloomberg) ORG XMIT: 673653023
Photo: Christopher Goodney
Bob Macherone, business agent for IUE-CWA Local 301, addresses union members and retirees as they hold a protest outside the gates of General Electric on Thursday, May 17, 2018, in Schenectady, N.Y. Retirees say that they are unfairly seeing benefits taken away year after year by General Electric after decades of working for the company. (Paul Buckowski/Times Union)
lessBob Macherone, business agent for IUE-CWA Local 301, addresses union members and retirees as they hold a protest outside the gates of General Electric on Thursday, May 17, 2018, in Schenectady, N.Y. Retirees
... more
IUE-CWA Local 301 union members and retirees take part in a protest outside the gates of General Electric on Thursday, May 17, 2018, in Schenectady, N.Y. Retirees say that they are unfairly seeing benefits taken away year after year by General Electric after decades of working for the company. (Paul Buckowski/Times Union)
lessIUE-CWA Local 301 union members and retirees take part in a protest outside the gates of General Electric on Thursday, May 17, 2018, in Schenectady, N.Y. Retirees say that they are unfairly seeing benefits
... more
IUE-CWA Local 301 union members and retirees take part in a protest outside the gates of General Electric on Thursday, May 17, 2018, in Schenectady, N.Y. Retirees say that they are unfairly seeing benefits taken away year after year by General Electric after decades of working for the company. (Paul Buckowski/Times Union)
lessIUE-CWA Local 301 union members and retirees take part in a protest outside the gates of General Electric on Thursday, May 17, 2018, in Schenectady, N.Y. Retirees say that they are unfairly seeing benefits
... more
IUE-CWA Local 301 union members and retirees take part in a protest outside the gates of General Electric on Thursday, May 17, 2018, in Schenectady, N.Y. Retirees say that they are unfairly seeing benefits taken away year after year by General Electric after decades of working for the company. (Paul Buckowski/Times Union)
lessIUE-CWA Local 301 union members and retirees take part in a protest outside the gates of General Electric on Thursday, May 17, 2018, in Schenectady, N.Y. Retirees say that they are unfairly seeing benefits
... more
IUE-CWA Local 301 union members and retirees take part in a protest outside the gates of General Electric on Thursday, May 17, 2018, in Schenectady, N.Y. Retirees say that they are unfairly seeing benefits taken away year after year by General Electric after decades of working for the company. (Paul Buckowski/Times Union)
lessIUE-CWA Local 301 union members and retirees take part in a protest outside the gates of General Electric on Thursday, May 17, 2018, in Schenectady, N.Y. Retirees say that they are unfairly seeing benefits
... more
IUE-CWA Local 301 union members and retirees take part in a protest outside the gates of General Electric on Thursday, May 17, 2018, in Schenectady, N.Y. Retirees say that they are unfairly seeing benefits taken away year after year by General Electric after decades of working for the company. (Paul Buckowski/Times Union)
lessIUE-CWA Local 301 union members and retirees take part in a protest outside the gates of General Electric on Thursday, May 17, 2018, in Schenectady, N.Y. Retirees say that they are unfairly seeing benefits
... more
IUE-CWA Local 301 union members and retirees take part in a protest outside the gates of General Electric on Thursday, May 17, 2018, in Schenectady, N.Y. Retirees say that they are unfairly seeing benefits taken away year after year by General Electric after decades of working for the company. (Paul Buckowski/Times Union)
lessIUE-CWA Local 301 union members and retirees take part in a protest outside the gates of General Electric on Thursday, May 17, 2018, in Schenectady, N.Y. Retirees say that they are unfairly seeing benefits
... more
IUE-CWA Local 301 union members and retirees take part in a protest outside the gates of General Electric on Thursday, May 17, 2018, in Schenectady, N.Y. Retirees say that they are unfairly seeing benefits taken away year after year by General Electric after decades of working for the company. (Paul Buckowski/Times Union)
lessIUE-CWA Local 301 union members and retirees take part in a protest outside the gates of General Electric on Thursday, May 17, 2018, in Schenectady, N.Y. Retirees say that they are unfairly seeing benefits
... more
GE Power, the General Electric Co. subsidiary headquarters Friday April 21, 2017 in Schenectady, NY. (John Carl D'Annibale / Times Union)
GE Power, the General Electric Co. subsidiary headquarters Friday April 21, 2017 in Schenectady, NY. (John Carl D'Annibale / Times Union)
Photo: John Carl D'Annibale
General Electric sign on Tuesday evening, Sept. 15, 2015, in Schenectady, N.Y. (Michael P. Farrell/Times Union archive)
General Electric sign on Tuesday evening, Sept. 15, 2015, in Schenectady, N.Y. (Michael P. Farrell/Times Union archive)
Photo: Michael P. Farrell
GE CEO's outlook on power business sends stock down
Schenectady
General Electric CEO John Flannery said Wednesday that the soft market for gas turbines will continue to plague the company's Schenectady-based GE Power unit into the next two years.
Flannery said last month that the market for GE's heavy duty gas turbines used in power plants had dropped to 30 megawatts of installed capacity a year, which is way below previous estimates.
However on Wednesday Flannery said that 30 megawatt a year level of sales or "maybe a bit below" would be the new norm for not just this year but into the near future as well.
"We are planning on this market continuing to be like this for 2019 and 2020," Flannery said. "So a soft end market."
The disappointing news sent GE's stock down 7.3 percent on Wednesday to $14.18 per share after Flannery made the revelation at the Electrical Products Group Conference in Florida, although the stock recovered some of those losses on Thursday. A half hour before markets closed, shares were up 38 cents, or 2.6 percent, to $14.56.
The news has huge implications for GE's local operations. Although GE only makes steam turbines in Schenectady, a large number of GE Power's executives are based in Schenectady. GE overall has about 6,000 employees locally with GE's Global Research Center located in Niskayuna.
Flannery took the reins over at GE last August from Jeff Immelt at a time when GE was predicting much higher gas turbine sales. However, the market for power plants turned out to be much weaker than GE executives had been predicting amid a pause in demand for new electric generation.
"It continues to be under pressure from energy efficiency, penetration of renewables, the storage things that are happening here... geopolitical things, financing," Flannery said. "The pricing environment is tough with everybody having excess capacity."
Flannery said he wasn't changing the financial outlook for GE Power since Russell Stokes, the GE Power CEO, has been looking to control costs and keep earnings level. Stokes has had to slash 12,000 jobs globally at GE Power and has brought in new managers to adapt the business to the new realities. About 200 jobs have been cut in Schenectady, including blue collar union jobs at the steam turbine plant.
"We have got operating profit at $1.9 billion flat," Flannery said. "So Russell and his team are taking a lot of steps to address the market environment that we have had."
Stokes reduced 2017 operating costs by $800 million and is working on taking out another $1 billion in operating costs this year as well.
https://www.timesunion.com/business/article/GE-CEO-s-outlook-on-power-business-sends-stock-12941010.php
