The new CEO of GE is shutting down research centers in Shanghai, Munich, and Rio de Janeiro. This shifts some of their engineering work into individual business units. The retrenchment will leave GE, which spent more than $5 billion on research and development last year, with just two global research sites, located in Niskayuna, NY, and Bangalore, India.
When asked about the looming changes, a GE spokeswoman said: "The company will continue to have an intense focus on our global operations and customer base," noting that the company gets 70% of its revenue from outside the U.S. The company is expected to report quarterly results on Friday that entail steep restructuring fees related to the changes, according to analysts.
GE is under intense pressure to cut costs and end a stock-price slide that includes a decline of more than 25% this year, erasing nearly $80 billion in value. At the same time, the broader stock market has hit records. Will the company see greater profitability due to decreased international exposure? What is the importance of having globally diversified research and development programs for a firm initially?
GE will have a short term decrease in their international exposure since they are cutting jobs out of these countries. However, GE is a name brand company in their market and will continue to have success. They clarified how important their international business is and I expect them to restrengthen their ties in upcoming months.
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