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UE Examines
Job Security,
GE Forecasts
The Economy
NEW YORK, May 28 — The UE committee devoted Wednesday morning to job and income security issues, including a
careful examination of the jobs situation at the Erie plant. In the afternoon, the committee heard two company
presentations looking at the economic climate and the state of GE businesses.
As a first order of business, President John Hovis introduced General Secretary-Treasurer Bruce Klipple.
David Kitchen, Local 506 Chief Plant Steward, reviewed the loss of jobs in Erie and the operation of the Job
Preservation Steering Committee (JPSC) to make the case for improvements in Article XXIII. Kitchen observed that Local
506 has seen a 19% reduction in its membership over the term of the contract, from 3,573 to 2,926 members. Other than
the layoffs announced in January 2002, the job reduction has been "subtle but constant," Kitchen said. The
only bright spot occurred in fall 2000 when SERO replacements were hired and SERO candidates were still in the shop.
Most of the SERO replacements have since been displaced.
No direct relationship exists between locomotive orders and employment, Kitchen argued. "When locomotive
production hit its peak there was no corresponding new hiring," he said. The increase in production only meant an
increase in the hours worked by the workforce during those periods."
Job loss has been a result of outsourcing, farmout, subcontracting, transfers of work and productivity changes, said
Kitchen, who went on to detail the job movement over the last two contracts, and the union’s efforts to prevent it.
"The success of JPSC measured by job loss would be less than adequate," he said. "Through the process,
approximately 200 jobs were either brought in or saved." This compares to approximately 650 jobs lost. In neither
of the two major announcements of job losses did the company utilize contract language that allows for areas of concern
to be addressed prior to "intent notices." This failure is insulting for several reasons, Kitchen said, among
them GE’s resistance to a moratorium on contracting out and supposed preference for "constructive dialogue."
Local 506 and local GE management experienced constructive dialogue in 1999, when the transfer of punch press work to
an outside vendor was accompanied by more jobs coming in than going out. The union reached agreement with GE in 2002 on
movement of warehouse work to facilitate introduction of new work. However, Kitchen continued, "the announcement in
early 2002 of the loss of 925 jobs (including more than 200 to be subcontracted) was certainly not in the same
vein." Instead, the process went backwards, he said. "The union now found itself not working in partnership on
JPSC but forcing the company into JPSC," Kitchen explained. Instead of pre-crisis talks as provided by Article
XXIII, he said "we were looking down the barrel of a loaded weapon pointed directly at the heart of one-third of
our membership." UE members serving on the JPSC were "less than impressed" by management’s interest in
participation.
In the end, Kitchen said, the union preserved 167 of about 215 jobs slated to be transferred. "We still feel the
company owes us over 40 jobs which we could not save through the process," he said.
Article XXIII states that "the company recognizes the importance of job security to the Union," Kitchen
observed, but this has not led to meetings between upper echelons of management and UE as allowed for by the contract.
Almost six months into the year, the Erie JPSC has not yet met. The process can be frustrating, Kitchen related.
Negotiations reversed a 2002 decision to outsource certain shafts. "Now you would think the company experts had
identified those shafts that were the most vulnerable for discussions, but what they did not include were shafts which
you spend more money getting done outside than inside," Kitchen said. Union JPSC members put together a proposal to
have such shafts done inside. "So much for your role in identifying areas for job opportunity (as provided by the
contract)," he told the company.
Another area, the subject of the most grievances, is the notification and subsequent farmout of trades work, Kitchen
said. Repeatedly the company has responded by agreeing that the work should not have been farmed out. The problem is
that local management has no incentive to follow the contract, he argued. Meanwhile, "trades manpower levels have
consistently decreased since 1967," he said, and "in some cases, classifications have been completely
eliminated." The conclusion is that 21-day notice and bargaining for trades work does not work, Kitchen insisted.
He presented charts showing a steady increase in subcontractors’ hours of work in the Erie plant. Even though the 2002
negotiations demolished the myth of cheaper contracting, "the company still allows these vendors to feed at the
trough," he said. The first 19 weeks of 2003 shows a 26% increase in subcontractors’ hours. These negotiations
must address GE’s insistence that it is not obligated to notify and bargain over contracting of trades work because of
a previous blanket notification.
Computer repair, "the jobs of the future," represents another category of work that should be done in-house
by union members, and covered by Article XXIII, Kitchen maintained.
"When we talk about the shortfall of language protection in Article XXIII, let’s not forget that indirect day
workers are still the targets of GE job elimination schemes," Kitchen said. He noted that outsourcing of stock room
duties is not the subject of Article XXIII notice and bargaining. "We do not suspect the company will back off
their attempt to reduce the size of this class of workers and provisions need to be included in Article XXIII
specifically to address this," Kitchen said.
Union demands for improved job and income security language are based on experience, the Local 506 officer stressed.
"Our members expect and they certainly have earned progressive improvements on the job security issue," he
said. If improvements are not forthcoming, "we will not, as in the past, be cheerleaders to speak on the merits of
Article XXIII, not at the expense of the union’s integrity," Kitchen declared.
In response, GE’s John Curtin said the JPSC efforts in Erie are among the most successful in the company. Much of
the job loss in Erie has been related to market downturn, he said, commenting, "I understand that when the number
of units being produced was going up, people were not hired proportionately—but we didn’t lay off people
proportionately either."
The process works "when both parties work at it, but not when one party is trying to avoid it," said
President Hovis. With regard to maintenance work in Erie, he said, "it seems easier for management to pick up the
phone and call a subcontractor than to talk to the chief steward."
Local 506 President Frank Fusco pointed out that the company laid off the entire machine shop department while
farming out work. Union Relations later agreed this shouldn’t have happened, he said. Something has to be done to
prevent these kinds of incidents, Fusco insisted. At the Fort Edward, New York plant, local management stated during a
grievance meeting that there were no contractors presently at work on-site. A look outside the window proved him wrong,
Local 332 Business Agent Bob Brown said. Production is up at Fort Edward, but the level of trades workers has not kept
pace, he said.
In his fourth decade of representing his co-workers, Local 506 Business Agent Pat Rafferty said it seems to him that
the company takes advantage of market downturns, when workers are most vulnerable, to impose conditions that wouldn’t
be attempted during boom years. Currently the company is attempting a back-door approach to eliminate jitney drivers,
stock-keepers and other indirect workers," he said. "We’ve got to shore up this language," Rafferty
said.
Curtin said the Article XXIII language was "never intended to be a guarantee of stable employment," but
instead an opportunity for negotiations. "It may not have worked as well as you would have liked, but it is
working," he said.
Marco Coeur, Local 1010, objected that the company was unwilling to bargain when it moved "non-production"
work out of the Ontario, California jet engine repair facility, despite quality, low-cost work and customer
satisfaction. UE’s Steve Tormey observed that with regards to Ontario, GE claims it has an "overcapacity
problem," but it is one of the company’s creation. "The company went on a shopping spree, nationally and
internationally, to greatly enhance its capacity," he pointed out. Job preservation is also about expanding the job
base, Tormey said. Company head-counters, and not just the market, are behind the hiring freeze in place in Fort Edward
and many other plants, he suggested. If volume is down, people have to go, and if volume is up, there is a hiring
freeze. Tormey noted that GE CEO Jeffrey Immelt has stated the company’s intention is to reduce 12% annually.
"Evidently, the plan is to take what we’ve been talking about and make it worse," he said.
"We have a chance to save jobs, if both parties work at it," President Hovis said. He emphasized that it is
unacceptable when managers ignore the contract and there are no consequences. GE’s Curtin responded by pledging his
personal involvement to make the process work if there are continuing problems with individual managers.
Wayne Reynolds of the UAW added that the UE members’ description of shop-floor problems resembles that of his
members in Evendale, Ohio—particularly with regard to lack of cooperation by plant management. UE efforts in Fort
Edward to preserve and expand jobs included a state-run job training program that failed due to company footdragging,
Bob Brown said. Marco Coeur questioned the lack of notice in Ontario layoffs: "Somebody knows what’s going to
happen in three months. UE Research Director Lisa Frank suggested that Article XXIII is so indispensable to holding on
to manufacturing jobs and the quality of life they represent, "it has to work as close to perfectly as
possible."
The union moved into specific proposals on job and income security, beginning with strengthening the maintenance
subcontracting provision. The union should be notified even in emergencies; the current 21-day bar on implementation of
subcontracting should be lengthened. The union called for the immediate right to strike after 45 days or an impasse has
been reached, whichever comes first, in plant-closing or transfer-of-work bargaining. The company should pay all
lost-time incurred with regard to JPSC work, including investigations. The job preservation guarantee in Article XXIII
should be lengthened to the length of the contract or three years, whichever is longer. The notice provisions for all
closings and work transfers should be lengthened from the present six months to one year—including non-production work—with
a removal of any restriction on information.
The UE committee called for renewal of the Special Early Retirement Option (SERO) and SERO 30, with the reopening of
the SERO "window," without a cap on participation. Union members also said eligible employees should be
allowed to take SERO in the event of temporary layoffs lasting more than two weeks. This provoked a lengthy discussion,
as UE representatives criticized GE for using "temporary" to make an end run around the SERO guidelines and GE’s
Curtin defended the company’s shifting definition of "temporary" layoffs. "Temporary used to mean two
to four weeks," Tormey observed. Ed Baran, Local 751, pointed out that long-service Niles/Mahoning workers have
been "left in the lurch," denied the opportunity to SERO-out. "Give us a definition of what temporary is
or isn’t," he asked. President Hovis and other committee members pressed Curtin for a clarification of local
management statements that there are SERO quotas for each location. These are only guidelines, Curtin said.
The union called for elimination of the 18% reduction qualifier for SERO 30 retirement. Eighteen percent is too high,
and makes this a symbolic rather than a real benefit, Tormey observed. The UE committee also said SERO 30 eligibles
should be able to retire after the exhaustion of regular SERO applicants following a job-loss event. This might be a
costly change, Curtin responded. Bob Roberts, IBEW, confirmed that his union’s experience is that SERO 30 is rare.
The union would prefer that there was no need for SERO over the next three years as a result of job losses, Tormey
said. "We didn’t go looking for pensions as a substitute for jobs," he stated.
The UE committee also proposed that Special Benefit Protection, now limited to workers with 25 years’ service, be
extended to workers with 20 or more years, and to employees age 50 with at least 10 years of service . The committee
also said employees under SBP should be allowed to participate in post-65 insurance plans at no cost. "We’re
looking to control and reduce health care costs, not increase them," responded GE’s Curtin. The union proposed
that Preferential Placement opportunities be extended to include all GE-controlled or joint-ventured facilities, and
that employees who have broken service be allowed to elect Preferential Placement status.
After the lunch break, the committee heard presentations from economic consultant Nicholas Perna and Bill Cary, GE
vice president for economic planning.
Perna, a former GE employee who gave a presentation at the 1982 and 1985 negotiations, sounded a warning about
possible deflation in a slow-growth global economy, and promoted corporate "flexibility." Perna forecast
continued low levels of inflation. He was cautiously optimistic about prospects for the U.S. economy, but also noted
that there was major downside potential.
Dave Kitchen, responding to Perna’s comments about the exchange rate, suggested that GE has an advantage by running
similar operations in multiple countries. Steve Tormey noted that GE is a participant in some of the trends described by
Perna, particularly the movement of intellectual capital and jobs abroad. And Tormey questioned the dire nature of Perna’s
deflation warnings, citing the burgeoning federal deficit. The problem of global excess capacity and slower growth
described by Perna is not new, Tormey said — and the solutions proposed over the years by corporations have not
benefited working people.
In his "GE Update," Cary borrowed from a presentation made by CEO Immelt to stock analysts earlier this
month. Cary emphasized the "brutal" economic conditions of the last three years. Dovetailing with Perna’s
presentation, Cary’s remarks forecasted continued slow economic growth in 2003. However, GE expects growing momentum
in the second half of the year, Cary said; GE is well-positioned for economic rebound.
GE’s goal is to see revenues double the rate of growth of the Gross Domestic Product, and 20% return on total
capital (ROTC), Cary said. The company has forecast anywhere between 3% and 13% profit growth in 2003, he noted. GE will
continue to make acquisitions that fit its strategic plans, as well as to divest itself of product lines that fail to
meet its high-profit, high-growth goals. GE will continue to be more focused in services; within the company’s
industrial sector, core business will represent 20%, technology and services 80%, he told union members.
Under questioning, Cary affirmed that there are few companies like GE that can acquire businesses across a range of
sectors.
Steve Tormey concluded the day’s discussion by commenting that he heard nothing in the two company presentations
that would lead him to believe that the union should moderate its proposals.
At the union side of the table on Wednesday, May 28, 2003 were General President John Hovis; General
Secretary-Treasurer Bruce Klipple; UE-GE Conference Board Secretary Steve Tormey; Research Director Lisa Frank; Bob
Brown and Dave Dennison, Local 332; Frank Fusco, Dave Kitchen and Pat Rafferty, Local 506; Ed Baran, Local 751; Marco
Coeur and Bill Wossum, Local 1010; Bob Roberts of the IBEW, Wayne Reynolds, UAW; and Mike Barrow, American Flint Glass
Workers. International Representative Chris Townsend represented UE at the IUE table.
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