GE Splits GE Energy into Three Business Units for Faster Decisions and Lower Costs

General Electric, Fairfield, Conn., said it will reorganize its GE Energy business into three standalone business units to speed decision making, reduce layers and decrease cost. The change will take effect in the fourth quarter of 2012, and the Energy headquarters organizational layer will be phased out by the end of 2012.

The existing GE Energy Infrastructure includes approximately 100,000 employees and expects to post revenues of approximately $50 billion in 2012. All three new business units will report directly to CEO Jeffery Immelt. The three business units break out this way:

GE Power and Water will be led by GE Senior Vice President and Power and Water CEO Steve Bolze. It’s headquartered in Schenectady, N.Y., and it provides “full lifecycle solutions” for power generation customers, including renewable energy and water processing technologies, GE said in a release. It will have approximately 41,000 employees and projected revenue of approximately $28 billion in 2012.

GE Oil and Gas, led by GE Senior Vice President and Oil and Gas CEO Dan Heintzelman, is headquartered in Florence, Italy. It provides equipment and services for all segments of the offshore and onshore oil and gas industry, including turbomachinery and drilling as well as surface, subsea, and pipeline equipment and services. It will have approximately 33,000 employees and planned revenue of approximately $15 billion in 2012.

GE Energy Management, led by GE Senior Vice President and Energy Management CEO Dan Janki, and headquartered in Atlanta, Ga., contains most of the product lines of interest to the electrical industry. It consists of technology solutions for the delivery, management, conversion, and optimization of electrical power for customers across multiple energy-intensive industries. It will have approximately 27,000 employees and will have planned revenue of approximately $7 billion in 2012.

“Big companies are always fighting organizational complexity,” Immelt said in the release. “We are taking action at a time when the Energy business is doing well. The business had a solid quarter with earnings up 13% and has a big backlog of great products. Removing layers is one way to reduce costs and increase our speed, focus and agility in the marketplace so we serve customers better.

GE Vice Chairman and GE Energy Infrastructure CEO John Krenicki will oversee the transition to the new Energy structure during the third quarter. During the fourth quarter, he will continue to serve as a GE vice chairman and advisor to Immelt. Krenicki has decided to leave the company at the end of 2012.