General Electric says it is splitting up its energy infrastructure division into three standalone businesses, a move that will remove a management layer, align the units with the industries to which they sell and cut overhead costs by about $300 million.
The change will be completed by the fourth quarter of 2012 and will include the departure of GE vice chairman and GE energy infrastructure CEO John Krenicki, who has worked for the company for 29 years. Krenicki will oversee the transition during the third quarter.
GE Energy Infrastructure employs about 100,000 people and will have revenues of about $50 billion in 2012, the company said. The three new businesses — GE Power and Water, GE Oil and Gas, and GE Energy Management — will report directly to company chairman and CEO Jeff Immelt.
Big companies are always fighting organizational complexity, Immelt said. “We are taking action at a time when the energy business is doing well,” he said.
The energy infrastructure business makes up about 30 percent of the company’s sales, a figure that has grown steadily over the past decade. GE’s energy division had revenues of nearly $12 billion in the second quarter, a 15 percent increase from the same period last year, according to SEC filings.
GE Power and Water, headquartered in Schenectady, N.Y., makes and sells heavy-duty gas turbines, generators, renewable energy technologies such as wind and solar, nuclear energy, and water and process technologies. The division, the largest of the three, has projected revenues of about $28 billion in 2012, GE said.
GE Oil & Gas, headquartered in Florence, Italy, provides equipment and services for the offshore and onshore oil and gas industry, including pipeline equipment and storage to industrial power generation, refining and petrochemicals. The division is projected to have revenues of $15 billion this year.
GE Energy Management, the smallest unit with a projected $7 billion in sales for 2012, is headquartered in Atlanta. The business unit provides technologies to manage energy use for the utility, industrial, renewables, oil & gas, marine, metals and mining industries.
GE’s energy storage business, which recently opened a $100 advanced battery manufacturing facility, will remain under the company’s transportation division.