Despite prosperity, GE looks to cut wages

General Electric has recovered nicely from the Great Recession. In 2010, GE reported profits of $14.1 billion, of which $5.1 billion, or 36 percent, came from operations here in the US. On top of all this bounty, GE will be getting a $3.2 billion federal income tax return this year. It currently has $127.1 billion in cash on hand, and its CEO, Jeffery Immelt received $21.4 million in total compensation in 2010. But GE’s prosperity hasn’t stopped it from trying to cut wages.

For instance, at its River Works plant in Lynn, Massachusetts, GE sought to cut wages for new employees by 25 percent in return for a promise to bring new work unrelated to production now going on at the plant. IUE-CWA Local 201, which represents workers at River Works, was willing to accept the lower wages for new workers doing the new work, but GE insisted that all new workers in the plant take a 25 percent pay cut. Local 201 wouldn’t accept pay cuts unrelated to the new work, and GE informed the union that it would not be moving the new work to the plant.

“Today, we were officially informed by GE that they have decided not to put new GE Transportation locomotive assembly into our vacant Gear Plant Building, previously slated for demolition,” said Local 201 business agent Ric Casilli in statement released on April 13. “Local 201 is extremely disappointed by this decision. We did everything in our power during the last 19 days to make this happen and bring new jobs into Lynn.”

Thanks to government stimulus money and an increased interest in light rail and other rail transportation, GE’s locomotive plant in Erie, Pennsylvania has excess work, and GE is looking for a place to perform the work that its Erie plant can’t handle.

Lynn River Works seemed like a good alternative. GE currently manufacturers airplane engines at River Works, but last January, it shut down the Gear Works Building at River Works, where it manufactured maritime gears for the US Navy. It wouldn’t have been difficult to convert the Gear Works site to locomotive production and create 300 to 350 new jobs in Lynn.

Local 201 was eager to get the new work and submitted a proposal that met GE’s specification. The union was willing to make the locomotive production unit a separate bargaining unit from the aviation production unit. It was also willing to accept the lower pay that GE said its locomotive production competitors pay their workers, about 25 percent below what production workers in the aviation unit make .

The union was also willing to allow changes to contract languages about the rules of production. “The union’s last modified bid proposal addressed company requests for competitive wages, multi-skill classifications, teaming, single flow process, ‘temporary workers’, and met the company’s wish to keep the new locomotive workers as a separate unit from our current aviation workers in the plant,” Casilli said. 

But GE insisted that new workers in the aviation unit be hired the same rate as new workers in the locomotive production unit, which would have amounted to a 25 percent pay cut for new aviation production workers. The union wouldn’t agree to the pay cut, and GE walked away from the deal.

Rather than pay new aviation workers the current rate of pay, GE decided instead that it will move forward with its plan to demolish the Gear Works plant later this year.

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3 thoughts on “Despite prosperity, GE looks to cut wages

  1. So where is GE going to put the new work? Where will they find workers willing to work for even less? Will it be in the U.S. South? Or some ravaged part of the rust belt? Or contracted out? Or not in the U.S.?
    It’s sad the union even had to be willing to grovel and accept 25% lower pay for workers in the new production. But even that wasn’t enough.

  2. And Gov. Perry will take credit for “job creation.”

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