General Electric was planning on laying off 330 people at the Lufkin, Texas, manufacturing facility, which was announced in January. However, due to the drop in oil prices, the number of jobs being cut at the Lufkin Oilfield manufacturing facility has increased to 575 jobs. This announcement comes in the middle of the week, which might be a company strategy to try to increase stock prices before the week is over, and to decrease the anxiety stockholders face in regards to the falling oil prices. General Electric has already seen over a 3 percent drop in stock prices within the past 12 months alone.
General Electric has a huge oil and gas division, which employes nearly 44,000 people, which in part is due to the purchase of Lufkin Industries back in 2013. When General Electric purchased Lufkin Industries in 2013, the purchase price was $3.31 billion, although revenue and profits have fallen quite a bit since the purchase. General Electric has seen the revenue and profits from the oil and gas division fall 5 percent just this year alone. This had led to a lot of the investments that General Electric has made come into question, especially within the past six months due to the fairly big decline in crude prices. General Electric has made several different purchases and acquisitions within the past two years in the oil and gas industry, since the company is trying to strengthen presence in that field.
General Electric decided that due to the decline in oil prices and the pressure from within, that it was best to go ahead and layoff 575 people in the Lufkin oilfield equipment unit now, and not wait for the oil prices to go even lower before trying to do something about it. With profits and revenue falling a little quicker than predicted, the company wanted to try to stop the bleeding as much as possible. Making matters worse is the fact that customers that use their services and equipment have begun to reduce the amount of capital expenditure for 2015, which is partially due to the lower demand for oil.
The future for General Electric is still uncertain, as the company struggles to deal with the decline in oil prices, and is still trying to make a name for itself in the oil and gas market. The company has not said yet when the layoffs will begin or which areas of the beam-pumping manufacturing facility will be hit. It’s likely that the increase from 330 layoffs to 575 layoffs is not going to be the last for the Lufkin, Texas, facility, but it all depends on the oil prices between now and the third quarter.