'Dramatic' Differences Between
Union, Company Evident
In Opening Remarks
New York – Tuesday, May 24
Negotiators for UE and General Electric began negotiations for a new national contract with very different views, as expressed in the two sides’ opening statements which they exchanged in the opening session of bargaining, beginning at 3:00 p.m. Tuesday, May 24.
UE President John Hovis began by quoting from a speech that GE Chairman and CEO Jeffrey Immelt delivered at West Point in December 2009. “We are at the end of a difficult generation of business leadership and maybe leadership in general,” Immelt had said. “Tough-mindedness, a good trait, was replaced by meanness and greed, both terrible traits.” Hovis commented, “These negotiations will provide Chairman Immelt the opportunity to show GE employees that his address was more than simply words.”
Hovis said that GE was “chastened” by the financial crash of 2008 and the resulting economic downturn. The bursting of the real estate bubble and resulting credit crunch “resulted in an unprecedented cut” in GE’s stock dividend, said Hovis, along with a steep drop in the stock price and loss of the company’s AAA credit rating. He reminded company negotiators that in past negotiations, GE has “lectured” union representatives that GE Capital was a more important and profitable component of the company than the manufacturing businesses in which union members work. “The irony did not escape UE members,” Hovis added, “that in the wake of the crisis, GE scrambled to persuade investors that it should once again be viewed as an industrial company.”
Hovis cited another 2009 Immelt speech – this one to the Detroit Economic Club – in which the GE CEO admitted 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.’” Hovis noted that such opinions sounded like something “from the pages of the UE News.”
But, the UE president cautioned, “the proof of the pudding is in the eating,” and the company’s actions over the past four years, and its rhetoric leading to the negotiations, raise “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,” said Hovis, “are far from encouraging.”
Certainly the company has “rebounded strongly” from the financial crisis, said Hovis and is therefore “in a position to address positively the issues that concern our members.” He noted GE’s 2010 gross profit of $14.2 billion last year, ranking it sixth among the Fortune 500. “Just last month,” Hovis added, in reporting 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.”
“One of the most disturbing aspects of the negotiations,” Hovis told the company, is the GE practice of imposing whatever it wants on its exempt salaried and some other non-union employees, in the middle of the contract term, “and then coming to the negotiations with the idea of sticking our members with it as well. In certain ways,” said Hovis, “ this is even worse than the Boulwarism of the 1950s and ’60s, 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.”
Hovis warned the company that UE members come to negotiations as “an equal partner.” While the company may be accustomed to having its way with non-union employees, “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.” Union members are well aware of their role in the company’s success, Hovis said. “Last year alone… GE workers produced an average of over $42,000 each in net profit, a figure not approached by any perceived competitor. ”
But GE workers have not been properly rewarded for their productivity, said Hovis. “On the contrary, GE workers will realize only about a 1.5 percent 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.” The GE cost of living adjustment (COLA) has only protected workers against “slightly less than 40 percent of price increases.”
To address these problems, the union will propose “substantial structural general wage increases in each year of the contract,” Hovis said, as well as an improved COLA formula. The union also believes it is time to “scrap the unnecessary and discriminatory extended progression schedules and inferior night shift differential imposed on new hires.”
The issue of medical insurance “has been perhaps the most difficult one we have faced in many sets of negotiations going back at least 26 years,” Hovis continued. But those past difficulties “may well pale in comparison to the challenges we face in this year’s negotiations. He reminded the company that soon after it imposed the high deductible “Health Choice” Plan on exempt salaried employees, the UE-GE Conference Board declared 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. (see: An Unhealthy Choice)” Hovis added, “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.”
The “sharp increases in recent years in contributions and co-pays” that UE members have endured in the negotiated Health Care Preferred and Comprehensive Medical Benefits Plans are still “far preferable… to the misnamed ‘consumer directed’ plans” such as Health Choice. The healthcare crisis, Hovis told the GE representatives, will “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 such a change comes about, Hovis promised UE’s continued resistance to GE’s attempts at “greater cost shifting to employees.”
The union intends to propose needed improvements to existing medical coverage, said Hovis, including enhancements to our vision, dental, and weekly STD coverage, 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 stance on healthcare has been of great concern to UE members, said Hovis, so too is the “dark cloud GE has placed over the future of the Pension Plan.” Here again the company suddenly imposed a major change on exempt salaried new hires, excluding such new employees from pension plan participation effective January 1, 2011. “Company newsletters seem to indicate we will be confronted with an onerous proposal to extend this to future hourly new hires as well,” said Hovis, even though the Pension Plan is in excellent financial health, and for 24 years the company has not made any cash contributions to the plan.
Hovis said that events of recent years, such as the 2008 stock market crash in which Americans lost over a trillion dollars worth of 401(k) savings, reinforced UE’s view that “a defined benefit pension is indispensable for a secure retirement for our present and future members.” The effort to deny pensions to new hires, said Hovis, 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.” Rather, he said, the union will propose pension improvements.
The company last gave an increase in pension benefits to retirees in 2007, and Hovis pointed out that those who retired since June 2003 have gone up to eight years without a 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.”
Turning to the subjects of layoffs and plant closings, Hovis reminded the company that the victims of its plant closings, since the last negotiations in 2007, include UE members from the Lighting Division plant in Conneaut, Ohio, and Niles Glass and Mahoning Glass in Niles, Ohio. Many Erie workers have been subjected to extended layoffs.
Given the continuing job insecurity of GE workers, Hovis said, the union will propose contract language improvements in this area as well as in income security. “These will include enhanced Income Extension Aid (IEA), a renewed Special Early Retirement Option (SERO), and reopening of the SERO ‘window’ provision.”
The union also intends to seek improvements in Sick and Personal days for hourly employees, a benefit that “ has remained untouched for over 40 years,” Hovis noted. “To say GE workers are overdue for marked improvements in this area is an understatement.” The union will also seek long-overdue vacation improvements, he added.
Hovis concluded by noting that UE and GE have a 74-year bargaining history. “Our union has entered into every set of negotiations… with a sincere desire to reach an equitable agreement. Our approach remains unchanged in 2011.” But he quickly added, “this is the most apprehension I have felt since I first became personally involved in these negotiations back in the 1980s.”
While the union and company have always had differences, he said, “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 the changes 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.”
He raised the union’s concern that the company is “overreaching”, and said the number and scope of issues the company 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.”
Hovis assured the company that the union intends to do all it can to achieve an agreement “that addresses our members’ needs” in a “reasonable” and “mutually beneficial manner.” He closed by saying, “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.
GE'S OPENING STATEMENT
GE’s bargaining spokesperson John Gritti delivered the company’s opening statement. He began by acknowledging John Hovis and UE-GE Conference Board Secretary Steve Tormey, both of whom plan to retire within the next year, and their roles in many successful GE negotiations. “All who have negotiated with both of you use words like tough, fair, honest, knowledgeable, trustworthy and solution oriented to describe the way you have worked with GE. I agree and expect the same during these negotiations.” He wished both Hovis and Tormey the best in their retirements, but noted that “we have a lot of work to do over the next four weeks.”
The remainder of Gritti’s opening statement, while presented in a cordial and gentlemanly manner, indicated a drastically different approach to these negotiations than UE’s, and seemed to confirm many of the concerns expressed in John Hovis’s remarks.
Gritti noted that since the 2007 negotiations the country experienced “the largest financial crisis since the Great Depression” with no mention of the causes of that crisis. He noted that GM and Chrysler had gone bankrupt, but attributed that “in part… to unsustainable wage and benefit packages.”
“We will discuss competitiveness often over the next four weeks,” Gritti promised, and said that “this tough economy has forced us to fight our competition for every sale.” He added, “Each GE business must be positioned to win profitable orders against its competitors to ensure long-term success, investment and provide good jobs for employees.”
Gritti commented briefly on some of the key bargaining issues. On wages he said, “For our existing employees, wage rates continue to be far above community level, and in most cases, well above industry rates also.”
His remarks on healthcare hinted at a renewed GE effort to shift costs onto workers. “The facts are that the cost the company pays toward a production worker’s healthcare is now more than $10,000 per year and continues to increase at two times inflation rates. It is clear that our existing healthcare platform masks the cost of service, and this must change … . We need every employee to take a more active role in using benefits wisely and controlling cost.”
Gritti’s comments on retirement were likewise troubling for the long-term future of the GE pension plan. “As we all know, defined benefit plans are rapidly being eliminated … . We believe that defined contribution plans provide flexibility for newly hired employees today and can also provide long-term financial security after a full career of work. I believe that this type of retirement program will be very attractive to new employees … .”
On the Special Early Retirement Option (SERO) and SERO windows, Gritti said, “SEROs have become extremely expensive, directly impacting the operating costs of individual businesses. SEROs are restrictive and ultimately cost jobs. I believe SERO window events also no longer make business sense,” adding that in general, people are retiring later, not earlier.
Gritti said that “GE jobs are among the best jobs in the community today and I believe they will remain at the top” after these negotiations conclude.” He added, “We will have jobs that attract the best and the brightest where we work. Your members demonstrate on a regular basis that we have some of the best employees in our communities and we are fortunate to have them.”
Gritti concluded by expressing his belief that, through “a lot of hard work” in the weeks ahead and “spirited debate,” the two sides will succeed in negotiating “another fair and competitive contract between UE and GE. I have confidence that we will get the job done again.”
UE negotiators were joined at the bargaining table by representatives of the IAM, UAW, Steelworkers and IBEW. All told, 25 union people were present at the opening session of UE-GE negotiations, and 11 company representatives.
Negotiations resume Wednesday morning.