GE to Lay Off All Employees at Latham Turbocharger Plant

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Industrial manufacturing behemoth General Electric Company GE recently announced that it plans to lay off all of its remaining employees at its locomotive turbocharger manufacturing plant in Latham, NY. The strategic move is aimed to reduce operating costs amid plummeting demand pattern owing to a challenging macroeconomic environment across the globe.

GE Transportation Engine Systems, one of the operating units of the company, used to manufacture locomotive heads, liners and pistons in the factory for turbochargers for Electro-Motive Diesel Inc. locomotives. The plant, located on a 4.4-acre site near Albany International Airport, houses a 66,000-square-foot building. In its heydays, the plant used to produce as many as 50 turbochargers a week, which has currently dwindled to a meager five.

General Electric earlier planned to shift the manufacturing unit to India to be closer to the end users. However, the company has recently decided to discontinue the entire business due to its non viability. Consequently, General Electric will lay off the entire workforce at the plant, which has depleted from 48 in June to 41 at present. The company will retrench the employees in phases between April and May in 2017, with the plant scheduled to close on May 25.

Nevertheless, General Electric has a significant presence in the Albany region as it invested in factories in Schenectady, at the Global Research headquarters in Niskayuna and the GE Healthcare plant in North Greenbush. However, the employee count has decreased from its peak of 40,000 to approximately 7,000.

Notwithstanding headwinds in the energy market, General Electric is poised for long-term growth. The company outperformed the Zacks categorized Diversified Operations industry with an average year-to-date return of 8.3% compared with 3.1% for the latter.

General Electric is pruning its operating portfolio to focus on core manufacturing businesses with a digital edge. Since Apr 2015 till the end of Sep 2016, GE Capital inked sale agreements worth approximately $193 billion in ending net investment, of which it has already completed deals worth $173 billion. By the end of 2016, the company expects to sell $200 million of GE Capital assets across the world. The transactions will realign the corporate strategy of the company to a manufacturing-based entity with emphasis on big-ticket items such as aviation engines, drilling machines, generators, medical equipment and scanners. With these restructuring initiatives, General Electric expects operating earnings from the industrial business to aggregate over 90% of its total operating earnings by 2018, up from 58% in 2014.

General Electric presently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Koninklijke KPN N.V. KKPNF , Hitachi, Ltd. HTHIY and The Middleby Corporation MIDD , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Koninklijke KPN N.V. is currently trading at a forward P/E of 27.5x.

Hitachi has a long-term earnings growth expectation of 13% and has beaten estimates thrice in the trailing four quarters for an average positive earnings surprise of 103.5%.

Middleby has long-term earnings growth expectation of 22% and has beaten estimates in each of the trailing four quarters for an average positive earnings surprise of 15.9%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: GE , MIDD , KKPNF , HTHIY

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