May 30, 2019 / 7:13 PM / 25 days ago

CORRECTED-UPDATE 1-GE's CEO 'stunned' that factory efficiency drive only just started

(In second to last paragraph, corrects to say GE is cutting power unit headquarters costs 20%, not overall power division costs. In last paragraph, corrects to say GE plans to cut another $800 million in power division costs, not $1.6 billion.)

By Alwyn Scott

NEW YORK, May 30 (Reuters) - General Electric Co's chief executive said on Thursday he was "really stunned" to learn that a major factory had only recently started using lean manufacturing techniques.

"It put me back a little bit to go to our Greenville, South Carolina, plant last summer and to have the team regale me with a really good lean production (project) that had just been implemented," Larry Culp said at an investor conference in New York.

"They did a very nice job. But just -- it really stunned me (to) be there in the summer of 2018 and have such an important plant at GE beginning its lean journey or re-beginning its lean journey."

Lean techniques are widely used to reduce manufacturing costs while increasing efficiency and quality. GE's Greenville factory makes large, gas-fired turbines that generate electricity in power plants around the world. GE's power business has been losing money and is the top priority in Culp's efforts to turn around the company.

"No business consumes more of my time right now," Culp said.

Culp also affirmed on Thursday that GE expects negative free cash flow in the second quarter, and said GE's power division plans to cut headquarters costs of $1.6 billion by about 20% over the next two years as it tries to become leaner.

Culp said GE cut about $800 million in costs at the power unit last year, and has plans to cut another $800 million through 2020, including the headquarter cost cuts. (Reporting by Alwyn Scott; editing by Leslie Adler and Phil Berlowitz)

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