Tuesday, May 24, 2011
On December 9, 2009 in prepared remarks delivered at West Point, General Electric Chairman and CEO Jeffrey Immelt stated, “We are at the end of a difficult generation of business leadership and maybe leadership in general. Tough-mindedness, a good trait, was replaced by meanness and greed, both terrible traits.” These negotiations will provide Chairman Immelt the opportunity to show GE employees that his address was more than simply words on paper.
Mr. Immelt’s remarks indicate that he was chastened by GE’s experience in light of what many commentators called the country’s worst financial crisis since the Great Depression of the 1930's. In GE’s case, the bursting real estate bubble and accompanying credit crunch beginning in 2008, resulted in an unprecedented cut in the dividend, the loss of its AAA credit rating, and a steep decline in its stock price, among other setbacks.
Having been lectured more than once in past negotiations about how GE Capital represented a much more important component of the Company and its profitability compared to its industrial businesses where union members resided, the irony did not escape UE members when in the wake of the crisis, GE scrambled to persuade investors that it should once again be viewed as an industrial company.
Indeed in a 2009 speech to the Detroit Economic Club, Mr. Immelt went so far as to say that the Company had “outsourced too much” of its business, noted that real wages in the country had declined over three decades, and stated that the idea that prosperity could be sustained in an economy based on services and consumption, rather than high value added manufacturing was “flat wrong”. Such sentiments could just as easily have come from the pages of the UE News.
And certainly there can be no doubt that GE has rebounded strongly from the depths of the financial crisis, and is consequently in a position to address positively the issues that concern our members. GE posted gross profits of $14.2 Billion last year, ranking sixth on the Fortune 500 list for 2010. Moreover, just last month, commenting on GE’s first quarter results, Mr. Immelt reported $82 Billion of cash on the company’s balance sheet, the third dividend increase to stockholders in the past year, and a record backlog of orders going forward.
But the proof of the pudding is in the eating. The Company’s actions over the past four years, and their rhetoric leading up to the negotiations, have raised grave concerns among our members concerning where they stand in a “reset” GE with respect to the vital issues of wages and living standards, medical insurance, pensions, and job and income security. The signs are far from encouraging.
Indeed one of the most disturbing aspects of the negotiations we face is the apparent GE strategy of simply imposing mid-contract, whatever they desire on their exempt salaried and some other non-union employees, and then coming to the negotiations with the idea of sticking our members with it as well. In certain ways, this is even worse than the Boulwarism of the 1950's and 60's, where GE’s “first and final” offer at least came after discussions with the unions, and not as a fait accompli, cooked up and imposed with no union input whatsoever.
UE members are an equal partner to these negotiations. Unlike employees in the Company who lack representation, GE will again be reminded that our members are not so easily dictated to. We too come to the table with proposals of our own, confident that in light of the indisputable fact that GE workers remain among the best and most productive in the entire world, we should be rewarded as such. Last year alone for example, GE workers produced an average of over $42,000 each in net profit, a figure not approached by any perceived competitor.
Nevertheless such productivity has not resulted in any significant improvement in our living standards. On the contrary, GE workers will realize only about a 1.5% increase per year in real wages over the past four years. That’s before sharply increased medical contributions and the effects of deep layoffs among many of our members are considered. This lackluster figure also reflects the erosion of our Cost of Living (COLA) provision to the point where it now protects us against slightly less than 40% of price increases, a figure that would be even lower were it not for the relatively low levels of inflation during the Contract period.
Accordingly, the UE will propose substantial structural general wage increases in each year of the Contract, as well as an improved COLA provision to prevent those increases from being consumed by inflation. We also believe it is high time to scrap the unnecessary and discriminatory extended progression schedules and inferior night shift differential imposed on new hires.
With respect to the issue of medical insurance, we would note that the issue has been perhaps the most difficult one we have faced in many sets negotiations going back at least 26 years. But while hard bargaining with GE over medical coverage is nothing new for us, the difficulties of the past may well pale in comparison to the challenges we face in this year’s negotiations. Shortly after GE’s imposition of its high deductible “Health Choice” Plan on exempt salaried employees, the UE-GE Conference Board stated that “Imposing Health Choice on GE workers will do nothing to lower overall health costs. What it will do is to transfer hundreds of millions of dollars from GE employees to the Company”. We stand by that statement, particularly in light of the fact that company data from 2010 reveals double digit decreases in GE’s health spending, even while employees subjected to Health Choice are being burdened with sky high deductibles and co-pays.
While we have endured sharp increases in recent years in contributions and co-pays for our negotiated Health Care Preferred and Comprehensive Medical Benefits Plans, they are far more preferable to us than any of the misnamed “consumer directed” plans we have seen, including Health Choice. The healthcare crisis will of course not be solved by “market” approaches, such as high deductible plans and medical savings accounts, any more than it was by the much touted “managed care” wave of the past. We continue to believe that fundamental change to our health care delivery system and the establishment of single payer national health insurance provides the answer. Until that time comes, we will maintain our resistance to GE’s preferred alternative of ever greater cost shifting to employees, including GE’s Health Choice Plan.
In addition, we will propose a number of improvements to our existing medical coverage, including enhancements to our vision, dental, and weekly STD coverages, as well as to the Medical Care Plan for Pensioners. We are also determined to protect pre-65 and disability retirees from excessive medical costs which will undermine the secure and dignified retirement they deserve.
If the Company’s pre-negotiations stance on health care is of serious concern to our members, so too is the dark cloud GE has placed over the future of the Pension Plan. Here again, without warning or precedent, GE simply shut off participation in the Plan to exempt salaried new hires and certain others, effective last January 1. Company newsletters seem to indicate we will be confronted with an onerous proposal to extend this to future hourly new hires as well. This is in spite of the fact that the Plan is in excellent health, and remains in many ways a competitive advantage for GE. Indeed 2010 will mark the 24th consecutive year that the Company will make no cash contribution to the Plan.
The events of the past few years, including the volatility of the stock market, in which Americans lost over a trillion dollars worth of 401(k) savings in 2008 alone, has again demonstrated and reinforced what we have always maintained, namely that a defined benefit pension is indispensable for a secure retirement for our present and future members. We also realize that denying new hires a pension would put the continued existence of the Plan for current employees on borrowed time. Quite simply, we are not prepared to sacrifice the Pension Plan on the altar of an accounting boost to GE’s balance sheet.
Instead we will make proposals to improve the Plan, including an increase in the guaranteed minimum tables, as well an improved regular formula, a substantial career earnings update, and long overdue improvements to disability pensions.
With respect to retirees, we acknowledge that the pensioners’ increase in 2007 provided welcome and important help. However GE retirees continue to be battered by increasing prices, especially for food, fuel, and medical care. Those who have retired since June, 2003 have now gone up to eight years without any structural increase in their pensions. It is time for GE to grant a substantial increase to retirees and to accept the concept of a pension COLA.
During the term of the current Agreement, GE workers continued to be subjected to layoffs, subcontracting and plant closings. Among the victims of plant closings were UE members from the Lighting Division in Conneaut, Ohio and at Niles Glass and Mahoning Glass in Niles, Ohio, whose plants contributed to GE’s prosperity dating back to the 1940's. It was not without irony that proceeds from the sale of GE’s Plastics division were used to finance a major restructuring of the Lighting Division which cost the jobs of many hundreds of employees. In addition, hundreds of Erie GE workers were forced to endure many months of layoff before eventual recall.
Given the continuing insecurity to which our members are subjected, we will propose improvements to our contract language in this area, as well as income security improvements. These will include enhanced Income Extension Aid (IEA), a renewed Special Early Retirement Option (SERO), and reopening of the SERO “window” provision.
As usual, GE has had little or nothing to say about the issue of paid time off. While some progress was made on this issue in the 2007 negotiations for the first time in many years, the Sick and Personal day schedule for hourly employees has remained untouched for over 40 years. Lower service workers are particularly disadvantaged, with those up to nine years service having only two S&P days per year. To say GE workers are overdue for marked improvements in this area is an understatement. In addition, our proposals in this area will include improvements to the vacation schedule, also long overdue.
In addition to the issues noted above, UE will propose a number of other changes to our existing contract language.
In conclusion, I would note that UE and GE have a negotiating history dating back 74 years. Our Union has entered into every set of negotiations since that time with a sincere desire to reach an equitable agreement. Our approach remains unchanged in 2011. However, we do not underestimate the difficulties we face over the next four weeks.
Frankly, this is the most apprehension I have felt since I first became personally involved in these negotiations back in the 1980's. While GE and UE have had our differences over the years, we’ve been able to work out mutually beneficial agreements without conflict, with the exceptions of 1946 and 1969. Our union is not attempting a wholesale revamping of a Contract and of benefits which has served both of us well. I am not confident, however, that the same can be said of the Company. Some of what GE has imposed on salaried workers and new hires strikes us not only as wrong, but at times mean-spirited, Mr. Immelt’s words at West Point notwithstanding.
I worry about GE “overreaching” at a critical time in GE’s rebound from the depressed economy. The number of issues GE is raising is the broadest and most profound I can recall. I don’t believe such overreaching to be in the best interest of either party. I can assure you that it is our intention to do everything possible between now and June 19 to achieve an agreement that addresses our members’ needs, and to do so in a reasonable, respectful, and mutually beneficial manner. To say the next four weeks will be challenging is an understatement. We in UE will put forth our best effort at finding a way to avoid having these negotiations end in a place I believe neither party desires. We sincerely hope the Company will do the same.