Tuesday, May 22, 2007
Mr. Hovis, Mr. Tormey, members of the CBC delegation … I would like to welcome you all to the first day of 2007 GE – UE National Negotiations.
It is great honor for me to have this opportunity to serve as GE’s lead negotiator with the UE at the National Level. It was a little over 25 years ago that I started my GE career in a small Lighting components plant in Conneaut. As we all know, the employees at this plant are proud members of the UE. Over the years, I have worked with many memorable union leaders at Conneaut, including Marcia Barnhart, who I’m sure we’ll see later in the process. It was at this plant that I first learned what unions were all about, and to this day, the strong bond at the Conneaut site remains apparent. Over the years, I’ve had the chance to lead a number of local contract negotiations with some of the CBC delegates sitting at the table today. It is good to see you again.
Mr. Hovis, Mr. Tormey, I’m fortunate to have with me a GE negotiations team that has a history of success with you and your team. John Curtin, a personal friend of mine and a long-time colleague and mentor, has graciously come back from retirement to offer his experience and expertise. Kevin Fitzgerald, is back to National Negotiations for the fifth time. He is clearly recognized as an expert in many areas of GE benefits, and I’m happy he is part of our team. Bill Bussa, who joined the GE Union Relations team less than a year ago, is here. He has worked very hard to quickly learn and has spent countless hours answering data requests and helping us during our benchmarking process. Jodi Boelema will be our note taker; Jodi is a Human Resources Manager from Erie.
We look forward to working with the UE committee under your leadership in the coming weeks. It is apparent that your opening remarks clearly state commitment to your members, as well as to the issues we will discuss over the next four weeks.
Mr. Hovis, Mr. Tormey … you have been through this process many times before, and as I look around this table, I see familiar faces I know have been part of the team that have negotiated contracts they could proudly take back to their members for approval. These contracts have resulted in what is typically the best job in town for your members — whether it is Erie or the other sites represented at this table. Our goal – and I hope your goal as well – is to emerge from these talks with a contract that is both fair and reasonable … one that is good for employees and also helps our operations remain competitive.
I expect that the next four weeks will be challenging with a lot of intense dialogue, as in the past negotiations. Like contracts in the past, the topics will be similar. I believe we share the challenge and the responsibility of negotiating an overall package that will be good for both union members, as well as the many diverse businesses in which your members work. We will certainly be discussing Healthcare, Pensions, Wages, Job and Income Security, SERO Windows. A number of other issues may likely arise as well. I’ll speak on each of these later, but first I would like to take a minute and reflect on some recent developments in the business environment and areas that are important to understand:
- Toyota is now selling more cars than GM; the big three no longer exist. GM and Ford are rapidly trying to downsize their way to potential profitability some day in the future. They both have many issues. You can’t pick up a paper without reading about massive legacy costs and the severe impact of those costs to these businesses’ viability. I bring up this example only because at one time, it was thought GM, for example, had no real competitors … that GM was so dominant that the automaker would always be #1. It has been said that GE has no real competitors; however, as we look at individual businesses, we don’t have to look far to see the competition.
- Another hot topic involves pensions and the creation of the Pension Protection Act that was enacted because of companies filing for bankruptcy and turning their pension liabilities over to the PBGC. The reward for companies like GE — with well-run, well-funded plans — is the penalty of higher premiums to cover underperforming plans. What some experts believe is that the government has started to administratively kill the defined benefit plan.
- On the topic of inflation … with oil and gas prices reaching new highs, it is difficult to feel that inflation is under control. Yet, when you look at the CPI numbers, the facts reveal that inflation has been relatively calm over the past four years of the present contract, and our employees have seen real wage gains.
- Unemployment continues to be relatively stable, and in fact, the GE–UE employment numbers are higher than 4 years ago.
- The ever-changing environment is making profound changes on the businesses we are in. Clearly, more customers are looking for environmentally-friendly solutions to their issues. We need to make sure we continue to be out in front on these issues, and like the "Evolution" locomotive, this can create jobs for our employees … your members.
I’m sure you have all heard the phrase "the value of a GE Job." If we look at what makes up a GE job, most folks interested in a job at a GE location might ask, "what does it pay?" The GE wage package, as we all know, is very attractive. GE’s typical wage can be as much as 49% higher than that of the national hourly production worker, as compiled by the Bureau of Labor Statistics. Over this last contract, real wage growth will be approximately 5%. This is likely the first item that every employee thinks about when a new contract is negotiated. As in the past, we must continue to offer a wage package that attracts and retains the type of GE employees we need to be successful. However, we must, at the same time, make sure we understand and appreciate the balance that is required to keep our different businesses competitive.
The next question a new hire might ask is … "do I get healthcare?" Healthcare is a topic that you can read about nearly everyday. Whether it is our government trying to figure out how to address the uninsured or underinsured, or companies talking about the rising, sometimes staggering cost of healthcare benefits, this topic is in the headlines often. Healthcare coverage is the one insurance that many of us take for granted … we use it without much thought behind it. Some of us in this room may have had the auto insurance conversation, which is, "should I report this dent or scratch to my in insurance company, because if I do, my rate may go up." I’m sure that thought does not cross the mind of anyone using healthcare insurance. I’m not suggesting we avoid using our healthcare coverage, but to realize the value of this benefit. Our costs per employee are rising, plain and simple. We feel that we must maintain a reasonable level of cost sharing between the Company and our employees. Our challenge over the next few weeks will be to figure out what is fair, and I look forward to creative dialogue and new ideas to help educate our employees on this very important and valuable benefit.
The next question or statement from our new hire might be … "do I get a pension?" We are fortunate to have both a pension and our Savings & Security Program. Fewer employers today are offering defined benefit plans. Ours is well funded — which is a good thing. Hopefully, this is comforting to those who are still years away from ever collecting. The pension has been improved a number of times over the years. Some critics say they should have more increases because of the funding status. We can’t lose focus that our pension design has always been to target a total "replacement income" of 70% to 80% when coupled with Social Security benefits and personal savings. I’m sure we will be discussing improvements, but we all need to be grounded in the understanding that the goal is to continue to be within our replacement income targets.
I’ve taken the last few minutes to talk about what it might be like for a new hire to join General Electric. Since January 2005, over 25,000 employees in the U.S. have joined GE under a benefits plan designed for today’s realities. These realities start with understanding we all live longer … that healthcare costs are rising rapidly with no end in sight … and that in some cases retirement years are lasting longer than years actually worked. These are issues that businesses must face head on; to ignore this could put some at risk of survival. This new-hire benefit plan offers the strengths of the GE Pension, which is a defined benefit plan, and an improved Saving & Security Program, which is a defined contribution plan. Offering both plans in today’s business environment is rare, thus making it very attractive to new employees joining the Company. There are many other features that we will discuss about this plan in the coming weeks, but I would like to point out a belief of mine. GE is able to attract the best and brightest from colleges, other businesses, and in communities where we work. The 25,000 plus employees that we have added under the new hire plan continue to prove this. If you look at the production sites where we have added significant headcount over the last four years, we have processed thousands of applications for hundreds of job openings. The value of a GE job has allowed us to hire the cream of the crop, and I truly believe that the new-hire benefits plan is attractive, competitive and will allow GE to hire and retain the best talent available.
The last topics I would like to touch on are Job & Income Security and the Special Early Retirement Option (SERO) window. As we all know, SERO is part of the Job & Income Security language. It was added to address job-loss events for long-service employees, and it has served the Company and our employees well. The replacement window was also added almost 20 years ago and has been updated a number of times. How a window event provides job security, and why it still makes sense based upon the extremely high costs to the Company, is a topic I’m sure we will debate. I look forward to hearing your ideas on this subject.
We have a lot of work to do in the weeks ahead. I look forward to listening to your ideas and proposals, I look forward to a spirited debate that I’m sure we will have on many issues. But most of all, I look forward to shaking hands on June 17th with a deal of which we can all be proud. You have my commitment and the commitment of this team to work as hard as we can to get a deal done. Thanks for listening.