Summary #6
Sharp Differences on Pensions;
More Discussion on
Healthcare and Job Security
New York – Thursday, June 2
Negotiations between UE and GE resumed on June 2 for a half-day session in which three issues were discussed by the bargainers - a GE presentation on a “Retirement Program Design for New Hires,” a GE presentation on health care from Leonard Nichols, a professor from George Mason University, and a UE-led discussion on job preservation.
GE’s Shameful Demand to Exclude
New Hires from the Pension Plan
GE Manager of U.S. Compensation and Benefits, John Fischetti began the company’s presentation by outlining recent trends on pensions. Fischetti claimed that since 2003, 92% of all new U.S. retirement plans were 401(k) plans or defined contribution plans (DC). Employers, as the GE manager explained, were moving away from defined benefit pension plans (DB) like the GE pension plan due to their unpredictable costs and new government funding rules. As a result, this year GE decided to exclude newly hired non-union salaried workers from the traditional GE pension plan and instead made an annual 3 percent “company retirement contribution” (CRC) to their Savings and Security Plan (S&SP) accounts.
From the very beginning of the presentation, the union Bargaining Committee indicated its strong opposition to ending pensions for new hourly hires represented by UE and replacing them with an annual 3% contribution. UE-GE Conference Board Secretary Steve Tormey told the company: “Let’s set the record straight, the three percent that you gave to new salaried hires doesn’t come out of nowhere, it comes out of important retirement benefits that you took away from new hires beginning in 2005 – SERO, retiree life insurance, retiree medical, age 60 early retirement, and pension supplements.”
UE President John Hovis voiced opposition to GE’s pension proposal, criticizing it because the proposal would make new hires work until age 65 or longer to get a retirement income. “If you’re using 65 as the retirement age in your projections, new hires can’t get full Social Security until a later age now and without the GE defined benefit pension, people will have to work much longer.
Ron Flowers of the Retirees Association of General Electric (RAGE) told the company: “I talk to retirees who are 56 or 58 who tell me that they are glad they retired because they were slowing down. When you say people can work longer, that may be true for people sitting at a desk, but when you’re talking about shop people, you can’t make it until 65. I couldn’t and retired at age 56 due to arthritis.”
UE Local 506 Business Agent Wayne Burnett, who deals with retirement issues in Erie on a regular basis remarked: “I see it all the time. You work 30 years in our physical jobs and you’re ready to go.” Flowers added: “People slow down at the end of their careers and people tell me they’re glad they’re out now. The pressure in the shop now is terrible.”
Steve Tormey and John Hovis jointly attacked the company’s motivation for its proposal to end pension participation for new hires. “This is all about packaging to help GE stock and you’re telling investors that GE is getting rid of legacy costs. The accountants are running GE’s ship here and they’re telling you to take out any liability. President Hovis echoed Tormey’s comments and reminded the company that GE has not paid into the pension plan since 1987. He asked: “If it’s not accounting issue why would the company elect to put 3% of wages into employee accounts every year, when you’re not putting that kind of money into the current pension plan?”
UE bargainers also questioned the rather rosy wage increase and investment return projections the company used in contending the new hire arrangement would provide adequate replacement income upon retirement. Company projections also assumed continuous employment for one’s career and without any periods of layoff, hardly the experience of GE hourly employees.
GE’s Goal – Eliminate the Pension Plan?
UE bargainers questioned GE’s motivation for taking “a relative handful of new hires out of a plan that covers over one-half million employees, vestees, and retirees,” supposedly to reduce “volatility.” Tormey said, “We believe that your long-term goal is just to get rid of the pension plan and you want us to go back to the membership and tell them that their pensions are now on death row. This is despicable.”
GE’s Fischetti remarked “we don’t want to hurt people,” while its spokesman John Gritti claimed “it’s about competitiveness.” However, the silence was deafening when neither GE representative responded to the charge that the company’s ultimate goal is to eliminate the pension plan altogether.
“This is a pension plan that you have not paid into for almost 25 years and you’re the envy of the corporate world,” UE International Rep. Gene Elk reminded the company. “You’re telling us that you’re not competitive – that’s outrageous.”
GE bargainers conceded that its defined contribution retirement accounts for new hires effectively ended disability pensions for them. However, its representatives reminded us that GE workers can buy the company’s Long-Term Disability (LTD) insurance. Local 506 leader Leo Grzergorzewski complained: “We’re supposed to contribute 7 percent of our earnings to the Savings and Security Plan and now you want us to spend another 40 bucks a week to insure against a disability that the pension has always covered for us.”
In addition, after cutting retirees’ life insurance for salaried new hires by 70% in 2005 to only $15,000, the company is eliminating this benefit altogether. Tormey characterized this as an example of a GE’s “mean-spiritedness,” referred to in the Union’s Opening Statement of the negotiations.
After the hour-and-a-half GE retirement presentation and contentious discussion ended, Tormey notified the company that UE will be offering its own detailed pension presentation during negotiations next week.
General Presentation
On Health Care Goals
Leonard Nichols, a George Mason University professor and former member of the Clinton administration, was invited by GE and talked about general health care goals. He made no specific reference to GE’s Health Choice proposal which had been the subject of lengthy debate during the previous afternoon.
Voicing his opinion that the new national health care law passed by the Obama administration was a step in the right direction, Nichols claimed that “it shows that as a nation we are committed to providing health care to everyone.” Noting that health care outcomes in the U.S. were extremely disappointing based upon the huge amount of money we pay for it, the economist said that “stakeholders” like employers, unions, and providers have a lot of work to do to improve the system. He urged company and union bargainers to “align” their health care goals, “trust” one another, and embrace change.
GE spokesman Gritti commented that “my take away” from Professor Nichols’ talk is that we need “smart cost-sharing that is bargained, smart use of tools, and smart consumer choices.”
From the UE side of the bargaining table, Ron Flowers asked the economist his thoughts on recent legislation approved by the state of Vermont to introduce a single-payer program run by the state, which would effectively eliminate insurance companies role in health care and the huge profits they take out of the system. “It might work in Vermont,” Nichols remarked. “Hospitals and doctors will be nervous about having only one provider of funds to pay them,” and he continued stating in “Vermont they’re probably going to walk in that direction not run.”
Constructive Discussion
On Job Preservation
Wayne Burnett, Local 506, began the discussion by referencing the job preservation provisions in the contract for job security and conceding that “both sides probably haven’t used it enough. In Erie, we think we can do a lot more to save jobs and save the company money on production.” He continued: “To do that we have start using the job preservation procedures that are in place a lot more.
“There’s a lot in the contract already, like job creation and training for maintenance workers so they can keep pace with improved technology, Leo Grzgorzewski of Local 506 commented. “But we really haven’t been able to get to those issues yet, because the job preservation committee members are forced to spend almost all of their time on farm-out issues.
GE Spokesmen Gritti asked if in Erie the union and company had formal job preservation committees in place and Leo answered affirmatively. “However,” he continued, “the things that we do seem to fall on deaf ears. There’s little reaction from Erie managers when we present evidence that we can save jobs and money.” Grzgorzewski wondered how the union could ever get managers to bring permanently subcontracted work back, if we can’t even get them to restore the farm-outs which had only been sent out of the plant on a temporary basis.
The 506 jobs preservation committee member further explained: “It takes months just to get information from Erie managers on farm-outs, but if they need to get a part in two or three days, they can figure out how to do that and they don’t seem to care about cost.” President Hovis said, “we used to have a system that works well and now it doesn’t.”
GE’s John Gritti asked: “Are you getting a runaround when you request data for your committee? “To be honest,” Grzgorzewski responded, “I get a response in a somewhat timely manner, but others on our committee don’t and we have to file grievances at the 2nd level. Wayne Burnett complained: “There used to be trust, but now the managers tell us we’ll deal with job preservation issues later.” Burnett told GE: “Its very frustrating because I know that we can do the work better and faster and save the company money and our jobs.”
Local 506 President Roger Zaczyk complained that “the farm-out issue has evolved from “capacity to cost,” in the constantly evolving list of reasons GE does not bring work back when farm-outs were originally supposed to be temporary to relieve capacity problems. “Now the latest twist,” the local president remarked, “is that we have a backlog and there are machines to do the work, but not the people to operate the machines.”
President Hovis explained to GE the original purpose of the job preservation program. “We wanted a system that saved money and saved our jobs without resorting to contractual work guarantees and detailed subcontracting provisions. We hoped that job preservation would do that and for a time it did. We want to make it work again.” Mary Stewart-Flowers noted that Local 618, representing non-exempt salaried workers in Erie, had been effectively excluded from the job preservation process and had gained zero jobs during the new hiring that has taken place.
GE spokesman Gritti noted that there has been good dialogue on this subject and that the issue ought to be referred to the contract language subcommittees. Roger Zaczyk told GE “that there’s no time limit on farm-outs and that ought to be addressed.” President Hovis concluded the discussion by telling the company that he thought it was a good idea to refer job preservation to the subcommittees.
The negotiating session ended after about three-and-a half hours. Contract negotiations will resume on Tuesday, June 7 at 9 a.m. in New York City.
UE was represented in the Thursday session by President John Hovis, Conference Board Secretary Steve Tormey, Secretary-Treasurer Bruce Klipple, Wayne Burnett, Roger Zaczyk, and Leo Grzgorzewski of Local 506, Mary Stewart-Flowers of Local 618, Scott Gates and Angel Sardina of Local 332, Harold Spencer of Local 1009, Ron Flowers of the Retirees Association of General Electric, and International Rep. Gene Elk. Political Action Director Chris Townsend represented UE at the IUE-CWA bargaining table. Also participating on the UE committee were and Rudy Gomez of the UAW, Tom O’Heron of the IAM, Mike Barrell of the Steelworkers, and Randy Middleton of the IBEW.