By agreement with GE, details of the proposed new contract will be withheld until Thursday to allow the GE Conference Boards of both the UE and the IUE-CWA time to consider the agreement and make recommendations to their respective memberships.

As in the past, we expect to provide a summary of the tentative agreement on the UE website late Thursday.

UE General President John Hovis said, “While the proposal contains important improvements and advances, it also contains certain disappointments. However, given the current economic climate overall it’s an agreement we can support.”
 

UE was represented at the small table by Conference Board Secretary Steve Tormey and General President John Hovis.

The unions and GE met at the small table for more than nine hours today and a tough day of bargaining is anticipated tomorrow (Sunday) before the contract expires at midnight.

Chief among the obstacles is medical insurance, a problem caused by GE’s insistence on a new Health Choice plan.

Tormey said the union has been “butting our heads against the wall for years” trying to improve the sick and personal day provision. Sick and personal (S&P) days for hourly workers were first added to the contract in the 1969-70 negotiations, and except for a slight improvement in 1973, the terms have not been changed since then. While the union believes in seniority, “we do not think S&P time should be a function of seniority.” People become ill and have personal business regardless of their age or seniority, and under the existing language workers with nine years of service get only two S&P days, and the benefit maxes out at 25 years with only five S&P days. Recent surveys, Tormey noted, show that U.S. private employers on average offer eight days of paid sick leave to employees. In Europe, workers have far more paid time off.

“It’s an area that’s been terribly neglected,” said Tormey, who also noted the contradiction of GE’s promotion of “healthy life styles” while at the same time pushing workers to come to work sick and infect others because of inadequate sick leave. The need for added sick and personal days is especially apparent in Erie, said Tormey, where there are large numbers of low-service employees.

Local 506 Business Agent Wayne Burnett noted that last year, a serious virus went around the Erie plant. A company representative urged people who were ill to stay home, “but if they don’t have the time, they’ll come to work sick.” Local 618 President Mary Stewart-Flowers added that she saw entire departments impacted by infections.

GE spokesman John Gritti said he didn’t think there has been much of a discipline issue for attendance, and that when people are sick, they stay home.

“That’s not necessarily true,” said Tormey and many people can’t afford to lose a day’s pay. Scott Gates, president of Local 332, said many people in Fort Edward do not stay home when they’re sick. Exempt salaried people have a much more generous sick and personal leave policy, noted UE President John Hovis, and it’s wrong to assume that hourly workers will abuse sick leave.

The union also proposed that S&P hours count as time worked in calculating overtime and vacation allowance. Progress was made in 2003 negotiations, Tormey noted, and up to four hours S&P time now counts toward overtime. “We should count this as time worked for all purposes.” It is paid time off and should count for overtime purposes.

“I see a lot of doctor’s appointments where people are taking an hour,” said Mary Stewart-Flowers. “It could be at the end of the shift. People then work overtime and don’t realize they’re getting straight time.”

John Gritti said he worried about “abuse,” to which Tormey replied, “You have a jaundiced view of our members.

Tormey introduced an additional proposal on S&P, that the company no longer be able to unilaterally apply a worker’s S&P days to an absence. “It should be the employee’s choice.” Wayne Burnett said the policy is applied inconsistently, depending on how busy the plant is.

Tormey moved into the topic of paid vacation. Here again, he said, there’s a big disconnect between workers and GE management and exempts, who gained improvements in 2003, the company unilaterally put in a new policy for exempt salaried providing three weeks at five years and four weeks at ten. Union members are entitled to at least those improvements, and UE further proposed 5.5 weeks at 25 years, and 7 weeks at 35 years.

Tormey read from a company document, introduced in 2000 negotiations, entitled “Care For Yourself,” advising employees to “find time for yourself.” This is sharply at odds, he noted, with the company’s stubborn resistance to granting more paid time off to workers. In light of the company’s onerous healthcare proposals, “‘Care For Yourself’ seems to be the theme of these negotiations, because you’re sure not going to care for us.”

Tormey outlined additional language proposals related to vacation. UE proposes to extend vacation time if any compensable time off occurs during the worker’s vacation such as S&P, short-term disability death in family, or being called for jury duty. The union also proposed that, at the employee’s option, vacation be applied to any portion of an absence for illness, accident, vacation, layoff or personal business. Wayne Burnett and Mary Stewart-Flowers gave examples of management dealing with these situations inconsistently and unfairly.

Tormey presented the union’s proposal that vacation shutdown be limited to two weeks during the summer, and to exempt bargaining unit employees with two weeks or less of vacation. They have no flexibility. The shutdown provision is sometimes abused by plant management.

The union proposed to delete the one-month return to work requirement (to regain vacation eligibility) for people who come back from sick leave. This provision is not only unfair, said Tormey, but also “archaic and obsolete.”

Tormey presented the union proposal for an additional holiday. While acknowledging that we gained one holiday 2007, he noted that when paid holidays were first included in the contract in 1946, there were six such holidays. “In 62 years, we picked up just six holidays.” When Gritti mentioned the Martin Luther King holiday, Tormey reminded him that it was added to the contract 13 years after it became a national holiday, “and you did it kicking and screaming.”

Tormey also proposed changing the current language that disqualifies a worker from holiday pay as the result of a continuous absense prior to a holiday. The proposed language would make this result less likely.

The union proposed an increase in stewards paid time from the present 1½ hours a week to 2 hours. Wayne Burnett, Local 506 President Roger Zaczyk, Tormey and Hovis discussed how the combination of young, inexperienced managers and supervisors, lean manufacturing, and greater complexity in operation are placing added work onto UE stewards, for which they need more union time.

Following a short break, Gritti introduced Brian Worrell, GE vice president of corporate planning. Worrell made a presentation on GE’s finances, business strategy and the economic environment, including PowerPoint slides, that showed GE rebounding from the financial crash and doing well. Profits and cash balances are up and the company’s debt is down. GE Capital is a smaller portion of the company than before the 2008 crash, and the infrastructure industrial operations are now a much bigger portion. The company now has $30 billion in cash to invest in making the company grow.

Steve Tormey questioned Worrell on why the company is spending money to buy back its own stock, noting that this does nothing to improve the company’s productive capacity or to innovate in products. Worrell replied that it enhances the value of each share of GE stock. Tormey also asked if the company’s high debt-to-equity ratio before 2008 didn’t reflect “recklessness” and “negligence” on the company’s part, and noted that it wiped out billions in the value of the company. Worrell took issue with Tormey’s characterization of the company’s actions.

Worrell noted that GE’s success in minimizing its taxes had been “fully compliant with the law.” “The tragedy is that you are fully compliant,” countered Tormey, “because of your extensive lobbying effort on taxes.” Both Worrell and Gritti tried to defend the company’s record on taxes and political lobbying, but it was clear that the widespread publicity about GE’s avoidance of corporate income taxes had made this an uncomfortable topic for the company. UE International Rep. Gene Elk commented, “We pay more as individuals in taxes than GE does. Of course you’re complying with the law, because you wrote the law.”

After a lunch break, UE Research Director Karl Zimmerman presented UE’s perspective on GE’s finances. “This was a hugely turbulent period for all U.S. companies, but GE stayed profitable and maintained its rank as the sixth largest U.S. company”

GE manufacturing profitability improved during the recession, and Zimmerman quoted GE’s CFO Keith Sharin: “Our industrial margins, at 17 percent, are at the top quartile of all our peer competitors.”

Other facts highlighted by Zimmerman’s presentation: GE beat almost all major industry benchmarks for all U.S. industries. GE Transportation is more profitable than all competitors, with a 9.4 percent margin. Even though this was a tight period, GE did better than all of its competitors. GE’s earnings per worker is greater than all major domestic competitors. GE’s profit margin (excluding GE capital) was greater than any domestic competitor (11.1 percent).

GE gained $16 billion in money from the bailout. Jeff Immelt’s compensation rose from $6 million to about $12 million, not including stock options. His total compensation including stock options is $21 million which is greater than his pre-recession salary.

On the other hand, growth in earnings for GE workers doesn’t begin to compare to to these numbers. The average annual wage growth rate is 1.65 percent. GE’s COLA is out of date. COLA payouts only cover about 40 percent of inflation.

After a short break, discussion resumed on wages. The high productivity of our members ought to mean that we share in the company’s success. “We’re not saying that we’re badly paid,’ said Tormey. “We can support a family on these wages. GE should take pride in that. It shouldn’t join the race to the bottom.”

Tormey ran through how a typical GE worker’s wages are reduced by taxes, health care contributions, long-term disability premiums and other payments. If Health Choice’s higher contributions are imposed, many workers will end up with around $36,000 after all these deduction. “The poverty line is $24,000 for a family of four, said Tormey. “Some of our members end up just $12,000 to 13,000 above the poverty line.”

Tormey discussed the erosion of living standards for U.S. workers, with public sector workers now under attack. “Jeff Immelt has admitted that he outsourced too much. People have been getting by on two jobs, second jobs and overtime when they can, and running up credit card debt.” The housing crisis was part of these trends. “I don’t blame GE for it, but you had your oar in it.

Instead of comparing individual wage rates with competing companies, GE needs to look at unit labor costs, he said, because nobody beats GE at getting more production and profit with fewer employees. “We may be making more money, but we’re also more productive.”

Gritti responded that GE competitors, such as Caterpillar, are “aggressive.” Wayne Burnett replied, “You’ve always had competitors. GE stepped all over EMD. Now your competitor is a little stronger. Since you know about that competitor, give us the tools and the parts to do the best job, and we’ll keep chugging along.”

John Hovis seconded Burnett’s remarks. “Erie management told us that they don’t have experience with competition. They haven’t had competition for 12 years. You have ‘just in time.’ Well, get the parts to our people in time so we won’t have to work overtime when the parts come in late. Management has to work on efficiency in the operation, including getting the members the parts and tools to do the job. They also admitted to us that they’ve been kind of arrogant with customers. You can’t do that when you have real competitors.”

The union noted that Erie built 900 locomotives in 2008, which would not have been possible a few years ago. John Hovis said that when he went to Erie in 1980, there were 7,500 workers, and the plant turned out just 300 locomotives. Our members make a large contribution to GE’s productivity gains, and it should be no surprise that we are asking for substantial structural wage increases.

Tormey commented on the need to improve COLA, which now covers only about 38 percent of inflation. He then presented other wage-related proposals, discriminatory night shift bonus for new hires. “The move from 60 cents to a $1 was a step in the right direction. It needs to be raised to the 10 percent that other employees receive.” Wayne Burnett added, “And it takes five years to get to 10 percent.”

For pieceworkers in Erie, the union proposed average earnings be paid for dispensary and lost-time lost accidents. “We also want average earnings when people are moved from their primary job for company convenience. We want people assigned to work that is technically within their classification earning average pay. “We see that a lot,” said Burnett. “People are moving more than ever. I may not be able to make what I usually make when I’m moved to a job I’m not familiar with.”

On salaried progression, the union proposed automatic progression to grade 12, in place of the existing merit step. “Our members never seem to get to grade 12,” said Mary Stewart-Flowers. Another UE proposal on salaried jobs is automatic payment of two steps above the group for group leaders.

The union proposed eliminating the extended progression for new hires.

“Our position is equal pay to equal work,” said Tormey “We don’t have a problem with a reasonable progression schedule when people are learning, but we have a problem when it’s just imposed for any new hires.”

Tormey then turned to some remaining paid-time-off proposals. UE proposed paying for required attendance at government administrative hearings the same as jury duty. Death in family should include legal guardian. The union proposes to eliminate the 17-day cap on military differential pay.

Finally, Tormey outlined the union’s proposals on family and medical leave. A workers’ annual FMLA entitlement should not be reduced by STD or workers comp leave. We seek paid FMLA leave, including paternity leave. Tormey noted that some states, such as California and New Jersey, already pay this leave.

Gritti replied, “I think that our disability plans are outstanding.” Tormey responded, “We’re not talking about STD, we’re talking about family leave. Compared to other countries we’re terrible. They do it all over the world, why can’t we do it here.

The two sides agreed to resume negotiations at 8:00 a.m. on Thursday.

UE was represented in the Wednesday sessions by President John Hovis, Conference Board Secretary Steve Tormey, Secretary-Treasurer Bruce Klipple, Director of Organization Bob Kingsley, Wayne Burnett and Roger Zaczyk of Local 506, Mary Stewart-Flowers of Local 618, Scott Gates and Angel Sardina of Local 332, Ron Flowers of the Retirees Association of General Electric, International Rep. Gene Elk, Research Director Karl Zimmerman. UE News Managing Editor Al Hart was present to report on negotiations and Political Action Director Chris Townsend represented UE at the IUE-CWA bargaining table. Also participating on the UE committee were Wayne Reynolds of the UAW, Tom O’Heron of the IAM, Mike Barrell of the Steelworkers, and Randy Middleton of the IBEW.

Updated: May 27, 2011

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 “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 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.