General Electric Corp. chief executive Larry Culp announced the organization will implement price increases to raise over $500 million during 2022, and cut $2 billion in operating costs, as it deals with supply-chain disruptions and other challenges to the business. Delivering orders is the “number one” problem for GE businesses, the CEO said.
As he detailed it, the supply-chain problem has manufacturers struggling to produce enough to meet current demand and to restock inventory, while managing higher raw material and labor costs resulting from the coronavirus pandemic and its aftermath.
Speaking to investors at the Bernstein Strategic Decisions Conference, Culp said some GE plants, in the U.S. and abroad, have been operating below full capacity due to various issues, including renewed pandemic concerns, adding that these operating problems also affect GE suppliers.
Culp emphasized that demand for GE products is strong across all its segments (aerospace, health care, energy), but delivering products to fulfill demand is an ongoing problem for the manufacturing group.
He said GE aims to lower material costs by implementing dual sourcing and nearshoring strategies. It also will seek to reduce its labor costs and increase operating efficiency, Culp indicated, but he avoided detailing how it will fulfill those targets.