Niskayuna
General Electric Co. has agreed with a group of its largest shareholders to cut $2 billion in its industrial units' costs over a two-year period, a move that could affect operations at its Global Research Center in Niskayuna.
One of those shareholders, Trian Fund Management, LP said senior management would make the cuts this year and next. Targeted areas, according to a report in The Wall Street Journal, would include cuts in research spending, in addition to reducing head count at its headquarters, cutting spending on business travel, and streamlining its information technology functions.
GE's Global Research Center is headquartered in Niskayuna, where it employs more than 2,000 people, many of them engineers and Ph.D-level scientists.
GE spent $4.78 billion on research and development in 2016, up nearly 13 percent from $4.24 billion in 2015. Spending in the segment of the company that includes GE Global Research Center climbed more than 27 percent to $2.24 billion last year from $1.76 billion in 2015.
In addition to its headquarters center in Niskayuna, GE has corporate research centers in Bangalore, India; Dhahran, Saudi Arabia; Munich; Oklahoma City; Rio de Janeiro; Shanghai; and Tirat Carmel, Israel.
GE has been shrinking employment in recent years as it has spun off some units, including GE Capital and its Appliances unit. Headcount worldwide was at 295,000 in 2016, down sharply from 333,000 in 2015 and the lowest in at least five years. Domestically, GE had 104,000 employees in 2016, down from 125,000 in 2015 and 136,000 in 2014.
While it has also shrunk locally, selling off such operations as its plastics production plant in Selkirk and its silicones unit in Waterford, GE continues to have an outsize impact on the Capital Region economy.
A 2015 study by consultants Tripp Umbach found that GE's Capital Region operations generated $1 of every $11.50 in economic activity, either directly or indirectly, while employing directly or indirectly nearly 4 percent of the region's workforce.
The report pointed out that technologies discovered or developed at the Global Research Center led to new businesses that located in the region to be able to continue drawing on the center's expertise. Perhaps the most significant was GE Healthcare's digital mammography manufacturing plant at the Rensselaer Technology Park in North Greenbush, which employs 140 people.
Trian said it invested in GE "because we liked its industrial businesses, appreciated the initiative to separate GE Capital, and believed management would meet its public commitment to shareholders to earn two dollars per share in 2018."
GE said it earned $1.49 per share last year.
Senior management's bonuses will depend on how well the company meets its profit and cost-cutting goals. If it meets both, bonuses will be boosted by 20 percent; meeting one will leave bonuses unchanged, and missing both will reduce bonuses by 20 percent.
Shares (NYSE: GE) gained nine cents to close Thursday at $29.62.