UE-GE 2007 Contract Information: Negotiations Summary - Wednesday, May 23rd (#2)

Summary #2
Job & Income Security; Wage
Increases, COLA, and GE’s Ability to Pay

NEW YORK – Wednesday, May 23

On the first full day of bargaining, the UE negotiating committee spent the morning discussing proposals to improve the job and income security provisions of the UE-GE National Agreement, and returned to that theme later in the day.

UE-GE Conference Board Secretary Steve Tormey opened the discussion by acknowledging, "We’re in relatively good times," with employment up in Erie and Ft. Edward in particular, "but we’re under no illusion that this situation is anything but transitory." Tormey noted recent reports in the business press that GE is moving toward a situation where a majority of its production is outside the United States, and press reports that call into question GE’s commitment to its lighting and appliance businesses.

The union proposed improvements in Income Extension Aid, starting with a substantial increase in the four-week minimum benefit, a particular concern to less senior GE workers who are the most likely to be laid off. UE also called for eliminating the waiting week on IEA. Tormey pointed out that, for workers affected by the IEA waiting week, that week without pay more than wipes out their wage increase for the year. Pat Rafferty, Local 506, noted that members laid off in Pennsylvania also suffer a waiting week for state unemployment compensation (UC), and the state now taxes IEA, further reducing its value. Ed Baran, Local 751, said Ohio members are also hit by a state UC waiting week.


UE proposed enhancements to the union’s notice and bargaining rights under Article 23. The proposed improvements include: requiring bargaining over subcontracting even when it does not immediately result in job loss; requiring bargaining over maintenance subcontracting even in emergency situations; lengthening the 21-day restriction on the company putting into effect maintenance subcontracting once the union has asked for bargaining; lengthening notice provisions for all work transfers to one year; notice and bargaining over any proposed process or technological changes affecting workers; and removing restrictions on information requests by the union. Frank Fusco, Local 506, said there have been instances in Erie of the company farming out work just to avoid paying overtime; in one instance this resulted in the company paying $15,000 more a week to get the job done than if UE members had done the work. "It’s hard to put the toothpaste back in the tube once it’s out," said UE President John Hovis, arguing that the company can avoid such costly mistakes by talking with the union before decisions are made and contracts are signed with outside contractors.

Members of the committee offered examples of the company abusing subcontracting, misleading the union and withholding information, as well as examples of good faith bargaining and information sharing that has benefited both parties. Pat Rafferty said some past management in Erie has tried to evade its responsibilities, but the situation is better today. Steve Tormey said the union’s information requests over potential job loss events have not been overly burdensome, and there should be no limits on relevant information that the union can get from the company in these situations. "People’s livelihoods are at stake." The company listened carefully to the union’s arguments and examples on these proposals and offered no contrary arguments.


Tormey outlined the union’s proposals to renew the Special Early Retirement Option (SERO), offer one or more SERO windows during the term of the agreement (depending on its length), and remove restrictions on potential participation. Several members of the committee spoke on this topic. Pat Rafferty said that he counsels members who are considering retirement, and increasingly sees people wanting to retire early who had always intended to stay on the job longer. "People are going at 60 due to physical, emotional and mental exhaustion. The company’s de-layering in the ‘90s made their jobs much tougher."

Rafferty’s comments were endorsed by Lynda Leech, Local 618. "People have more responsibilities at home as well as at work. The company has noted that people are living longer, but that means baby boomers have elderly parents to care for." Ed Baran added, "People are being forced to choose between their health and employment."

Company spokesperson Gritti responded to the union’s proposals on SERO, saying, "SERO windows stress the operation and are very costly." But Eric Snedaker, Local 1010, responded, "I take issue with the costliness of SERO," and pointed that two-thirds of his local’s members were forced to take SERO when the Ontario, CA jet engine repair facility underwent major downsizing to a test cell. Bruce Reese, Local 332, said his members made it very clear to Scott Gates and himself that they are eagerly awaiting another SERO window as a result of these negotiations.

Steve Tormey took the company to task for its "hypocrisy" on SERO, noting that the company has abused the program, in some cases offering SERO packages beyond what the contract allows and when there was no ‘job loss event.’ Noting the company had offered SERO when it served the company’s purpose, Tormey argued, "You guys play fast and loose with the rules when it suits you – and now you come to us crying crocodile tears about ‘cost.’" Tormey suggested that if the company wants a way out of "the SERO conundrum" it has created, it should lower the early retirement age below 60.

John Hovis told the company that in order to achieve a contract, they need to satisfy both the older and younger workers, and for many older employees, SERO and early retirement are of critical importance. Tom O’Heron of the Machinists, Rudy Gomez of the UAW, and Bob Roberts of the IBEW also joined in the discussion, emphasizing the importance of SERO to members of their unions who work for GE.

Tormey described additional UE proposals on SERO: allow employees to take SERO in case of extended temporary layoffs; eliminate the 18 percent reduction qualifier for SERO 30 retirement; and allow SERO 30 eligible to retire when the list of regular SERO applicants has been exhausted following a job loss event.

The union proposed extending the preferential placement provision to cover any layoff of one year or longer, and to expand the pool of placement opportunities to include all GE-controlled and joint venture facilities.

Also on job and income security, UE offered proposals regarding plant sales. Employees whose plant is sold should have the option of taking severance, with all the plant closing benefits in the contract. The new owner of the plant should be required to recognize the union and accept the terms of the contract. Tormey noted that workers affected by GE plant sales in recent years have faced increasing risks, as the buyers are often private equity firms with no knowledge of or commitment to manufacturing the plant’s product.


Following a lunch break, UE Research Director Karl Zimmerman made a detailed presentation, including PowerPoint slides of charts and graphs, on GE’s outstanding economic success, titled "GE Invests – Does GE Deliver?" GE is the sixth largest company in the U.S. and a greater economic power than many countries. In revenue, profits, rate of profit, profit per employee and productivity of its workers, GE continues to set records, far outpace its so-called competitors, and to exceed any industry benchmark. Yet over the term of the present contract, UE members have realized wage increases, adjusting for inflation, of only 92 cents per hour. Cost of living adjustments (COLA) over the life of the contract have totaled $1.11, but to truly cover inflation, the COLA should have paid an additional $1.82.

Zimmerman’s presentation led into UE’s proposals on wages and COLA. The union proposes substantial general wage increases, said Steve Tormey. The parties may quibble, within a narrow range, over exactly what the wage increases have been under the expiring contract, said Tormey, but "we’re somewhere around one percent a year in real wage growth."

"The company would never tolerate this growth rate in any of its numbers," such as sales or profit, "and any GE manager who delivered such paltry results would soon be looking for a job." Our members are lucky that inflation has been relatively low over the past four years, Tormey noted, because if it had been significantly higher, given the inadequate protection provided by the present COLA, there would have been no real wage gain at all.

"We take the position that a GE employee ought to be able to maintain a reasonable standard of living for themselves and their family without working overtime and without their spouse working." Tormey said.

"Lean production puts a lot more requirements on the employees than ever before in skill, care and responsibility," said Pat Rafferty. "The company compensates its exempt personnel when they take on added duties, but not hourly workers." John Hovis added that GE’s performance shows that, "you’ve got the best, most productive employees in the world," and the company ought to pay its workers accordingly.

Tormey reviewed the history of the GE COLA. At its high point, in 1979, the COLA recovered 74 percent of the increase in the cost of living. Despite several upward adjustments in the formula, the protection has continued to erode. "It’s now at its lowest rate ever," said Tormey, and for those months of the current contract when it’s been in operation, COLA has recovered 42 percent of living cost inflation, but taken over the entire term of the contract, the recovery rate is only 38.7 percent.

Pat Rafferty and Frank Fusco, Local 506, presented the union’s proposals on the incentive pay, or piecework system in Erie. These include applying general raises and COLA to both sides of incentive pay – multiplier and base rate; paying the worker’s incentive wage average in more situations, including when a worker is temporarily taken off his/her regular job for the company’s convenience; increased downtime allowances; and protections against unjustified changes in prices.


The union proposed the end of two wage injustices affecting less senior employees: the night shift differential of 60 cents instead of the standard 10 percent; and the extended pay progression schedule. Tormey pointed out that when the 60-cent shift payment was introduced in 1988, it represented approximately five percent of hourly wages; today it’s around 2.2 percent. Frank Fusco estimated that with recent waves of hiring, approximately 20 percent of his members are now on the lower night bonus.

On progression, Bruce Reese said many Local 332 members are upset because they are paid 70 percent of what the person working next to them is receiving. This gap in pay "is just wrong," added Frank Fusco.

The parties will return to the table Thursday morning, with the company making a presentation on healthcare benefits.

UE was represented in Wednesday’s bargaining by President John Hovis; Secretary-Treasurer Bruce Klipple; Conference Board Secretary Steve Tormey; Scott Gates and Bruce Reese, Local 332; Linda Leech, Local 618; Eric Snedaker, Local 1010; Pat Rafferty and Frank Fusco, Local 506; Ed Baran, Local 751; and UE Research Director Karl Zimmerman. Also participating on the UE bargaining committee were Tom O’Heron of the IAM, Bob Roberts of IBEW, Rudy Gomez of UAW, and Mike Barrell of the Steelworkers. Chris Townsend, UE political action director, represented UE at the IUE-CWA bargaining table.