General Electric Co. announced Thursday that it will cut 12,000 jobs from power division amid a global softening of electricity demand and the switch from coal and other fossil fuels.

"The plans announced today are driven by challenges in the power market worldwide," the manufacturing giant said. "Traditional power markets including gas and coal have softened. Volumes are down significantly in products and services driven by overcapacity, lower utilization, fewer outages, an increase in steam plant retirements, and overall growth in renewables."

The company said Thursday that the cuts will "right-size" GE Power amid the transition taking place in the power markets. The job cuts will save the company $1 billion, it said.

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"This decision was painful but necessary for GE Power to respond to the disruption in the power market," said GE Power head Russell Stokes.

"Power will remain a work in progress in 2018," he said. "We expect market challenges to continue, but this plan will position us for 2019 and beyond."

Stokes added that at its core, GE Power remains "a strong business.” He said the company generates more than 30 percent of the world's electricity while providing the equipment to 90 percent of transmission utilities globally.