Summary #2
Union and Company Debate
GE Finances, Wages, Paid Time Off

New York – Wednesday, May 25

The second day of UE-GE National Negotiations – the first full day of bargaining – kicked off at 9:00 a.m. After a discussion of the bargaining schedule for the next several weeks, UE’s Steve Tormey began presenting the union’s proposals on paid time off.

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.

SICK AND PERSONAL DAYS

“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.

VACATION, HOLIDAYS

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.

GE FINANCES

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.”

WEDNESDAY AFTERNOON

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.”

COMPETITION, PRODUCTIVITY

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