GE workers look to make progress not concessions when contract talks begin

GE has always been generous to its investors but its workers have always had to fight for their fair share. That’s why union leaders are expecting GE to ask for benefit concessions when unions and GE begin negotiating a new contract in May even though the company is flush with cash.

Bob Santamour, of the International Union of Electronic Workers-Communication Workers of America (IUE-CWA), told a gathering of local union leaders that it is important that the unions representing GE workers fight for improvements in the contract and not get bogged down in defensive issues.

According the United Electrical Workers (UE), GE will ask unions to accept concessions to their defined benefit health and pension benefits that the company has already imposed on non-union salaried employees.

At a recent meeting of leaders of local GE unions sponsored by the Coordinated Bargaining Committee of GE Unions (CBC), Steve Tormey of UE told the gathering that GE is now offering its non-union salaried employees a high-deductible health plan as an option to the company’s more comprehensive traditional health care plans, and he expects that GE will want this option included in the new union contracts, which expires June 19.

High-deductible plans can be attractive to healthier workers with few medical expenses because premiums are lower, but they are a problem for those remaining in traditional comprehensive plans. 

As healthier workers leave comprehensive plans for high-deductible plans, the percentage of less healthy members covered by the comprehensive plans increases driving up premium costs. At some point the premium differential between the two options could be so great that the company could either force everyone into high-deductible plans or make those remaining in comprehensive plans pay much more for health care.

High-deductible plans also cost women more. “High-deductible plans punish women for having breasts and uteruses and having babies,” said Dr. Steffie Woolhandler, the co-author of a 2007 study on the costs of high-deductible plans. “When an employer switches all his employees into a consumer-driven health plan, it’s the same as giving all the women a $1,000 pay cut, on average, because women on average have $1,000 more in health costs than men.”

GE also will no longer allow new non-unionized employees to enroll in the company’s defined benefit pension plan, which provides a secure retirement annuity; instead, new salaried employees will be required to enroll in defined contribution plans, whose benefits depend on how well the stock market performs.

Tormey said that GE could try to do the same to newly-hired unionized employees in the new contract. Doing so would, mean that the company’s defined pension plan will wither away, and as it does, benefits for those remaining in it will shrink.

GE’s pension fund is sound and the company hasn’t had to contribute to it since 1987, but like most businesses, GE is trying to shed legacy costs like pensions.

By weakening its defined benefit health care and pension plans, GE is shifting more health care and retirement risk onto individual workers. It’s doing so even though the company is sitting on a mountain of cash and future business prospects are bright.

Tormey said that GE has about $30 billion in cash on hand. That amount could be even more now. GE reported $4.5 billion in net income for the fourth quarter of 2010, and the company, which manufactures a wide range of products including jet engines, turbines, medical imaging machines, and home appliances, has a backlog of $175 billion in orders.

Instead of investing its cash reserves in its workers, GE has been using its cash to buy other companies such as Dresser Industries for $3 billion and Clarient, a medical diagnostics company, for $580 million. GE has also begun to buy back its own stock, which increases the value of its stock.

The Coordinated Bargaining Committee is made up of representatives from seven unions that have contracts with GE: IUE-CWA, UE, United Autoworkers, United Steelworkers, International Brotherhood of Electrical Workers, and International Federation of Professional and Technical Employees.

The coordinating board was organized in the 1960s because GE had a history of playing one union off against another in contract negotiations. Over the years, the coordinating board has managed to get the expiration dates of its contracts to end on the same day to give unions a better bargaining position.


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