Union Opposes GE
On New Hire Benefit Cuts
NEW YORK – Wednesday, May 30
The day’s bargaining session began with a presentation by a GE benefits representative Barbara Beckmann on the benefit cuts imposed on salaried new hires in January 2005. The company presentation had two parts: "What are the changes?" and "Why did we make the changes?" While not yet made as a formal proposal, it is clear to all that the company wishes to impose these same cuts on its hourly employees and all workers covered by union contracts.
The company patted itself on the back for continuing to offer the pension and S&SP program to salaried new hires, and Beckmann said GE increased the employer match on S&SP from 3.5 to 4 percent. But as most GE workers know, GE slashed early retirement benefits for these people. Any of them who retire at age 60 will see a five percent per year reduction in their pension, subtracting back from age 65 – in other words, a 25 percent cut. They’ll be ineligible for SERO, PCPO or SSBO. If they become disabled before age 60, their disability pension will be further reduced, using the age 60, 25 percent reduced pension as the base. The same added cuts apply to a surviving spouse pension when the employee dies before age 60 with 15 years pension service, and to accelerated pension for job loss with 25 years pension service for an employee under age 60.
The company took a meat cleaver to retiree health benefits. Pre-65 GE coverage will be available, but the retiree must pay 100 percent of the premium. Post-65 GE coverage disappears entirely. Those who leave the company on disability pension get health coverage up to age 65 – the retiree must pay the active employee share of the premium, and a dependent must pay 50 percent of the plan cost after four years. Retiree life insurance is limited to $15,000.
Members of the union committee offered some comments during the benefits presentation – mostly angry criticisms of the company’s plan. UE-GE Conference Board Secretary Steve Tormey pointed out that neither of GE’s shifting formulas for health care cost sharing now appear to apply – neither "reasonable" nor "competitive." For retiree health care, the company’s new cost sharing formula is "none" – the worker must bear the entire burden.
In regard to the attack on disability pensions, Frank Fusco, Local 506, reminded the company that its factory workers face much more danger of a disabling injury at work than do its salaried employees. When company spokesperson John Gritti defended the cuts with the excuse, "The world is changing," Rudy Gomez of the UAW responded that what’s changing is corporate America, and that after "going to the third world and exploiting people," GE is now "trying to bring it to us." Gomez angrily added, "These benefits have been built over 50 years."
Beckmann then turned to the second part of the presentation, the supposed reasons why GE wants these changes. These reasons can more properly be described as a list of excuses: People are living longer; Social Security retirement age was already raised to 67 for those born after 1959; many young people say they plan to work longer; GE’s retiree health costs doubled since 1999 (to which Tormey immediately replied, "That’s just not true!" as UE had shown in its health care presentation with GE’s own figures); other companies have gotten rid of defined benefit pensions; and most companies no longer offer retiree health coverage.
One slide in Beckmann’s presentation included these words, "Retirement continues to be a shared responsibility among government, employer, individual." Tormey pointedly asked if that "shared responsibility" includes health coverage in retirement, and accused the company of "pious hypocrisy," since it proposes no company responsibility for retiree health care.
'IT MAKES THE STOCK LOOK BETTER'
UE President John Hovis identified the real reason GE is after these horrendous cuts. "This is being done to feed the shareholders at the expense of the employees. It makes the stock look better. The shareholders come first, and this is all about the price of GE stock. And you’re taking it out on the new hires."
When Beckmann agreed with Hovis’ analysis, Tormey asked, "Then how come that’s not part of your presentation?" Tormey said the presentation was "fundamentally dishonest" because it covers up GE’s real motives.
Tormey read excerpts from a March 16, 2004 Wall Street Journal article titled, "How Cuts in Retiree Benefits Fatten Companies’ Bottom Lines." The article explained the real reason corporations are attacking retiree benefits – including the benefits of young workers and not-yet-hired workers who will not retire until decades from now. "When companies cut these benefits, the create instant income." The article adds, "…thanks to complex accounting rules, the very act of cutting retirees’ future health care benefits lets the company reduce a liability and generate an immediate accounting gain. In some cases it flows straight to the bottom line. More often it sits on the books like a cookie jar, from which the company takes a piece each year that helps it meet earnings estimates… It may sound strange that a company can get income by cutting benefits it hasn’t paid and may never pay, but that’s how it works."
Tormey read another quote from the Wall Street Journal article, which reinforces the union’s fear that these cuts will eventually lead to further benefit cuts affecting current GE workers: "Gradually, the pools of accounting gains generated by early rounds of benefit cuts and caps run out. When that happens, companies sometimes cut further, replenishing the pool."
In that regard, Tormey asked Beckmann if she could offer any assurances to current GE workers in their 20s and 30s, that their retirement benefits will not be attacked. She said she could not. John Hovis commented, "We know once GE gets a foot in the door, it’s just a first step."
Lynda Leech, Local 618, called the company’s presentation "an insult to our intelligence," and told the company, "Your new hires are a resource that needs to be taken care of." John Payne, Local 731, said, "It would be nice to have 20 comfortable years of retirement," but described the reality facing his mother, a Conneaut GE retiree who can no longer walk and has to choose between buying food or her medications.
Bill Courter of the Flint Glass Workers/United Steelworkers said workers at his Logan, Ohio plant recently asked a new salaried employee what he thought of the new GE benefits. "It’s not as good as it was, but I didn’t have a choice," was the reply. Tom O’Heron of the IAM blamed GE’s move to offshore operations for driving the competition among U.S. companies to slash benefits. "It should be a good thing that life expectancy goes up," he added.
Ed Baran, Local 751, pointed out that there is a lot of turnover among new GE salaried employees, but that "hourly employees come to stay." Company spokesman John Gritti agreed. Marcia Barnhart, Local 731, criticized the company for eliminating jobs, and Eric Snedaker, Local 1010, also spoke against the company’s direction.
Tormey again pressed the company on its financial motives, and asked, "How many billions have you already realized in accounting gains?" as a result of the salaried cuts. The company finally acknowledged the motive behind its actions. "We’re not trying to hide that we do this for financial reasons," said GE negotiator John Curtin.
HOURS AND OVERTIME
The union presented its proposals on contract language regarding hours and overtime. The union proposed double time and a half plus holiday pay for hours worked on a holiday. Ed Baran said workers on continuous operations in his local must often work holidays.
The union called for ending discrimination against second and third shifts by paying double time for early call-ins on all shifts. The union described abuses of the current language in Fort Edward, Anaheim, Niles, and Erie. "The company put a brand new employee on a press alone to avoid paying overtime," said Ed Baran. Bruce Reese said Ft. Edward management changes the hours of shifts in order to escape premium payments; these abuses provoked a strike by Local 332 last September. Tormey said Niles management stated in a Step 3 grievance meeting, "We don’t call in on double time." Pat Rafferty, Local 506, summed up the fairness issue involved: "There ought to be parity here."
The union proposed double time for all hours worked over 12, regardless of what day it occurs on, as a disincentive for the company to schedule double shifts; and that sick and personal hours count as time worked in calculating overtime pay.
The union offered two proposals on Article 28, Upgrading and Job Posting. It proposed language changes to award all jobs within the three-month progression schedule to the senior bidder with minimum qualifications; and to establish the right to lateral and downgrade bids, regardless of future earnings potential. Bruce Reese said that most departments in Ft. Edward are on the same pay grade – R-15 – and so the current language makes it impossible for most workers to move.
The afternoon session was devoted to two presentations scheduled by the company, both of which were relatively non-controversial. Richard Sorian is vice president of public policy of the National Committee for Quality Assurance (NCQA), a health care accreditation and consulting firm. His presentation dealt with the U.S. health care crisis overall, and he showed that the U.S. lags behind many other countries in providing for the health of its people, while paying twice as much for health care as other major industrial countries. Sorian’s presentation made it clear that major change is needed to fix the U.S. health care system; nothing in his presentation supported GE’s position that shifting more costs to workers is the answer.
The other presenter was Shane Fitzsimmons, GE financial planner, on GE’s financial performance and business plans. He provided a rather detailed inside look at GE’s business strategies that was very informative, and supported UE’s position that GE is an extraordinarily successful company that can well afford to treat its employees well.
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; Marcia Barnhart and John Payne, Local 731; Lynda Leech, Local 618; Eric Snedaker, Local 1010; Pat Rafferty and Frank Fusco, Local 506; and Ed Baran, Local 751. Also participating on the UE bargaining committee were Tom O’Heron of the IAM, Bob Roberts of IBEW, Rudy Gomez of UAW, and Bill Courter of the Steelworkers. Chris Townsend, UE political action director, represented UE at the IUE-CWA bargaining table.
Bargaining resumes Thursday morning, with the union planning to present its proposals to increase paid time off.