UE-GE 2011 Contract Information: Negotiations Summary - Tuesday, May 31 (#4)

Summary #4
UE, GE Discuss
Job and Income Security,
Spar on Pension Issues

New York – Tuesday, May 31

Negotiators for UE and GE resumed bargaining on Tuesday, May 31 with a half-day session following the Memorial Day weekend. Discussion focused on two subjects, the UE’s proposals on job and income security and a company presentation on “Pension Plans in the 21st Century,” by Robert Clark, an economics professor from North Carolina State University.

UE Conference Board Secretary Steve Tormey opened the discussion on job and income security, stating “after the terrible year of 2009,” we need to seriously address improving IEA. The union proposed eliminating the waiting week to collect the benefit, noting that one week without pay every year for those laid off more than wiped out the 1.6% real wage gain realized in each year of the current contract. The union also proposed raising the minimum four-week IEA benefit and lowering the one year service requirement for IEA eligibility.

Tormey justified UE’s IEA proposals, telling the company that the union’s own data indicates that since July 2007, 131 laid off workers received no IEA benefits and many more exhausted IEA after just four weeks. Tormey also noted that under the stimulus act passed by Congress in 2009, an additional $25 per week was to be added to each unemployment check to provide extra help to laid off workers. Instead GE simply pocketed the money.

Wayne Burnett, Local 506 complained that during layoffs in Erie a number of members who worked partial weeks did not receive IEA because their combined earnings and unemployment benefit exceeded 75 percent. Roger Zaczyk of Local 506 reported that one member had been denied IEA because he had been transferred during the 2009 slowdown and then laid-off for medical reasons.

Randy Middleton from the IBEW surprised the GE committee when reporting that the State of Indiana was denying unemployment benefits to workers who have short-term layoffs with a date-certain recall. Under the current GE system of tying IEA benefits to unemployment, those Indiana workers would no longer be eligible for IEA. Tormey said that IEA should not be tied to unemployment “given the current political climate, there’s all kinds of crazy things which could happen to adversely impact our IEA benefits.”

UE bargainers also proposed raising severance pay for workers who lose their jobs during a plant closing. Tormey reminded the company that severance benefits have not been improved since they were first negotiated in 1982, stating that workers who are impacted by plant closings now have diminished job prospects arising from high unemployment and the scarcity of manufacturing jobs. Since all workers regardless of service are equally affected, the union stated there was no justification for a lower multiplier for severance pay for workers under 15 years of service.

The UE committee also proposed applying rate guarantees to workers indirectly affected by work transfers in addition to those directly eliminated. Tormey noted that “we had 268 people in Erie qualify for rate guarantee but the number who did not qualify down through the bumping chain was much higher.”


Burnett and Tormey both raised the serious issue of subcontracting and so-called “farm-outs” in Erie. Farm-outs are supposed to be used to cover production of work which can’t be done when departments are working at full capacity. Burnett commented, “everyone in Erie knows what’s supposed to happen, when the work gets slow the farmed-out work is supposed to be returned to the plant.” Instead, he said, GE managers refuse to bring back the jobs saying it's “cost issue.” The Local 506 leader asked “how did a farm-out become a cost issue when the company only sent the work out because of capacity?”

Leo Grzergorzewski from Local 506 complained that it used to bother GE foreman to see production farmed out, but now its just easier for them to farm-out work. “Farm-outs are rampant” he stated, noting it was often easier for managers to blame ensuing problems on contractors, rather than managing the work in-house. Wayne Burnett said, “I am looking for the company to keep its word on farm-outs and only farm-out work based on capacity. ... This is a matter of integrity and it used to be a handshake was given and it's your bond, but now GE managers give us a handshake with one hand and the knife in the back with another hand.”

Commenting on farm-outs, Roger Zaczyk told GE that they undermine the quality of the product. “The quality issue is huge ... we had to replace locomotive engines because of poor quality parts from farm-outs.” UE General President John Hovis remarked that inspectors tell our Erie members to just send out poor quality parts and that they will be repaired in the field. Hovis complained that Erie then gets blamed and that it gets around that the plant has a quality problem.

Tormey summed up the farm-out conversation by telling GE that UE wants farm-outs to be treated as a transfer of work under the National Contract for purposes of notification and bargaining. GE had the theory that farm-outs should not be treated as a work transfer because there is no job loss, Tormey said “but we are losing a job, it just doesn’t happen until work slows down and the farmed-out job isn’t returned.” He continued, “we need to have real bargaining before the work is moved,” by means of farm-out.

The UE bargaining committee also told the company that we need more than the twenty-one day notice to bargain about maintenance subcontracting currently provided by the National Contract. Tormey recalled that he had recently received a 589 page print-out of skilled trades subcontracting for Erie alone, covering 34 months. “Wholesale projects are going on that we didn’t know about and people who left during the SERO windows were not replaced and farm-outs replaced them.”

Zaczyk and Mary Stewart-Flowers, Local 618, both told GE that Erie managers refuse to hire new workers in maintenance and among the non-exempt salaried ranks. Stewart-Flowers said “all we hear when we talk about adding new jobs is ‘no, no, no it’s a headcount issue.’”

GE spokesman Gritti seemed to get the message, asking: “The way we’re handling subcontractors is not working as well as it once did.” Wayne Burnett responded by telling the GE committee: “Absolutely, it’s broke.” Leo Grzegorzewski added: “In some cases it takes up to five months or more to get the information we need for bargaining on subcontracting.”

Tormey outlined a union proposal that would extend the time period for work transfer moratoriums when the union and the company arrive at a settlement in job preservation negotiations for specific jobs. The current twelve month period (or the remainder of the National Contract, whichever is greater) would be extended to a more a lengthy period of three years (or the end of the contract, whichever is greater) under the UE's proposal.

UE also proposed that preferential placement for laid off workers be extended to all GE controlled operations or joint ventures as well as traditional GE plants.

Also on the subject of job and income security, Tormey told the company the union is proposing that workers impacted by a plant sale should have the option of taking GE plant closing benefits or keeping their employment with the new company, and that any successor company should be bound to the provisions of the contract. He reminded the company that when GE sold the Allentown, Pennsylvania plant to Black and Decker the new company attempted to gut plant closing benefits when they had an intent to close the plant from the time it was purchased. Tormey added: “When GE closes a plant, it should not be allowed to just wash its hands of what was there, and leave us holding the bag.”


Concluding the subject of job and income security, UE told GE that the SERO window should be re-opened with one-to-one replacement of workers who leave under the program. Tormey reminded the company that SERO was originally negotiated because the company refused any real job security or guarantee of work in the contract, a position that remains unchanged. As a result, SERO has been an important component of income security for those eligible, and has helped to offset job loss and enable younger workers to remain employed.

After a short recess in the afternoon meeting, North Carolina State economics professor Robert Clark gave his presentation on pension trends. It was clear that GE had brought Prof. Clark into negotiations to lay the groundwork for its attack on new hire pensions.


GE’s presenter claimed that prior to the 1970s most pensions provided a defined benefit. Since the passage of Federal regulations to protect pensions, he has observed “substantial movement” from defined benefit plans to defined contribution plans, which provide no set pension benefit.

Clark claimed that in the last twenty-five years, the number of defined pension plans has declined seventy-five percent.

Defined benefit plans have also declined, according to Mr. Clark due to increased life expectancy, greater administrative costs for maintaining the plans, and “increased volatility in financial markets which makes the funding of traditional pension plans more unpredictable.” Clark also told the UE committee that companies that make automobiles do not want to be in the business of providing pensions and are moving away from the traditional plans and are increasingly moving to 401(k) plans. To sum up his presentation, the North Carolina State professor claimed that workers must accept “more individual responsibility for retirement planning and income.”

Like GE’s health care presentation last week, the presentation on pension trends was punctuated by spirited discussion and debate, which illustrated the widely differing perspectives on pensions held by the Company and the Union.


Tormey responded to the GE presentation by telling the company that the volatility of the economy proves that defined benefit plans are more important and necessary than ever. He criticized the suggestion that seeking expert advice and education overcomes the deficiencies of 401(k) plans, and asked: “Who’s going to advise us, the same financial geniuses who advised us into the 2008 recession?”

Tormey and President Hovis took aim at the defined contribution plans as a substitute for defined benefit plans such as the GE Pension. “Everything I have read,” Hovis said “indicates that baby-boomers are going to have to work longer because of the switchover to defined contribution plans.” Tormey added that the Wall Street Journal recently reported that workers nearing retirement only have about twenty-five percent of what is needed in these plans to retire with a decent standard of living. He added that periods of unemployment cause workers to spend their 401(k) plans leaving little or nothing for their eventual retirement.

According toTormey, traditional defined pension plans are professionally managed and more efficient because they pool funds rather than sending us into “the casino of private accounts.” To rely strictly on private accounts, puts us in great jeopardy.

GE spokesman Gritti reminded UE that many of GE’s competitors do not have defined pension plans. He cautioned that GE will be raising the issue later in negotiations and that the trend away from defined pensions in the future is clear. Tormey responded by saying that any move by GE away from the continuance of its defined benfit pension plan is unacceptable.

UE President Hovis informed GE that a trillion dollars in private 401(k) plans had been lost in the 2008 recession. Tormey told the company that it has done very well with a defined benefit plan and will continue to do so.

Negotiations will resume on Wednesday, June 1 at 9:00 a.m. in New York City.

UE was represented in the Tuesday session by President John Hovis, Conference Board Secretary Steve Tormey, Secretary-Treasurer Bruce Klipple, Wayne Burnett, Roger Zaczyk, and Leo Grzergorzewski of Local 506, Mary Stewart-Flowers of Local 618, Scott Gates and Angel Sardina of Local 332, Harold Spencer of Local 1009, Ron Flowers of the Retirees Association of General Electric, International Rep. Gene Elk. Political Action Director Chris Townsend represented UE at the IUE-CWA bargaining table. Also participating on the UE committee were and Rudy Gomez of the UAW, Tom O’Heron of the IAM, Mike Barrell of the Steelworkers, and Randy Middleton of the IBEW.

Updated June 1, 2011, 10:31 AM