General Electric is downsizing its onshore wind unit to restructure and resize the business as it struggles with low demand, rising prices, and supply-chain bottlenecks.

The layoffs are expected to hit 20 percent of the onshore wind division’s employees in the United States, equating to hundreds of jobs.

The industry machinery maker notified staffers in North America, Latin America, the Middle East, and Africa about the reductions. 

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It also intends to trim its onshore wind staff in Europe and the Asia Pacific at a later date.

GE stated that it was “streamlining” its onshore wind business in response to market realities, but made no direct comments on job cuts.

A company spokesperson said: “These are difficult decisions, which do not reflect on our employees’ dedication and hard work but are needed to ensure the business can compete and improve profitability over time.”

Onshore wind is GE’s largest renewable business, employing 38,000 people globally at the end of 2021.

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However, the division has been dealing with rising raw material costs due to inflation and supply-chain constraints.

In the US, GE’s most profitable onshore wind market, policy uncertainty caused by the expiration of renewable energy production tax credits last year has hampered customer demand.

This has resulted in a decrease in revenue for the unit this year.

Wind turbine firms face a harsh climate due to increased competition, supply shortages due to the pandemic, and skyrocketing metals costs worsened by the Ukraine crisis.

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Even as governments and businesses push for more renewable energy in the wake of climate change, they are struggling to produce profits.

Siemens Gamesa announced last month a plan to reduce 2,900 employees, primarily in Europe, following a succession of earnings warnings this year.

The woes at GE’s onshore wind unit, which made 15 percent of its industrial sales last year, are impacting the company’s entire renewable energy business.

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In July, the firm blamed two-thirds of the fall in its second quarter renewable revenue on its North American onshore wind business.

GE has prioritized its onshore business as it prepares to spin off its energy businesses, including renewables, into a different company in 2024.

The onshore division is attempting to decrease fixed costs as part of its efforts to boost profitability.

The Boston firm expects this might result in a couple of hundred million dollars in savings next year.

Source: Reuters

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