Contract negotiations between GE and its two largest unions, UE and CWA-IUE, got underway on May 24 and May 23 respectively. The themes of the two sides’ opening statements are examples of how wide the gap is between labor and capital today–perhaps the widest it has been in 70 years.
John Gritti, speaking for GE at the UE negotiations, emphasized competitiveness and how demands of the market will require concessions from workers. John Hovis, speaking for UE, talked about productivity gains made by GE workers and their right to share in the fruit of their own productivity.
If anyone missed the point. Gritti, who leads the company’s negotiations with UE , told union negotiators that “we will discuss competitiveness often over the next four weeks.”
Gritti pointed out that with unemployment hovering around 9 percent GE workers are facing stiff competition in labor markets. GE recently posted job openings in two of its plants. In Louisville, where GE makes appliances, 10,000 people applied for 300 new jobs; in Erie, Pennsylvania, where GE makes locomotives, 5,000 people applied for 100 jobs. These responses lead GE to believe that their current wage and benefit package is more than adequate to attract new employees.
Competition in the markets for GE products, according to Gritti, is even stiffer, and the volatile nature of these markets means that the company can’t count on its backlog of orders to continue. To keep GE’s prices competitive, GE workers must be willing to accept stagnant wages and cuts to their pension and health care benefits.
GE proposes that the unions accept GE’s high deductible health care plan, which it has already imposed on its non-union exempt workers. High deductible plans require workers to pay thousands of dollars in health care expenses before the insurance plan starts paying for any care.
GE also wants to bar newly hired union workers from participating in the company’s defined benefit pension plan, which provides a guaranteed benefit upon retirement. Currently non-union new hires are not allowed to join the defined benefit plan; instead, they must join a defied contribution plan, whose value is tied to the ups and downs of the stock market.
Gritti said that other companies have stopped providing pensions that guarantee a lifetime benefit, and GE wants to do the same because of “the potential volatility and unpredictability that these plans can bring to a company’s bottom line.”
Gritti disingenuously warned that “unsustainable wage and benefit plans” forced GM and Chrysler into bankruptcy, ignoring the more salient fact that bad management decisions and dicey loans and poor investment decisions made by the companies’ financial services divisions played a bigger role in their plunging bottom line.
Speaking for UE, General President John Hovis said that the increased productivity of GE workers has made a lot of money for the company and its investors, but increased productivity has not translated into better living standards. For this contract, UE would be seeking increased benefits, better pay, and an end to the company’s two-tiered night shift differentials and progression schedules.
“We come to the table with proposals of our own,” Hovis said. “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.”
Hovis said that GE’s gross profits for 2010 totaled $14.2 billion ranking it the 6th largest among Fortune 500 companies and that recently GE rewarded stockholders with their third dividend increase in the past years. Last year GE workers produced an average of $42,000 per worker in net profit.
The UE and CWA-IUE contracts expire on June 19, which gives the two sides about four weeks to work through these difficult issues. GE will negotiate local contracts with workers in other unions.
Hovis ended his opening remarks by calling GE’s attempt to seek concessions when the company and its investors are making huge profits an act of “overreaching,” which makes reaching an agreement that “is reasonable, respectful, and mutually beneficial” for both parties difficult. “To say the next four weeks will be challenging is an understatement,” Hovis said. “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.”