About $180 billion of General Electric’s market value has evaporated over the past four years.(AFP/GETTY IMAGES/FILE 2016)
Health care. Wages. Retirement. Sounds like the standard mix of concerns for union negotiations, right?
Well, Jerry Carney has one more to add. And Carney says this one should top the list at General Electric: job security.
Can you blame him? Carney, an IUE-CWA leader, is negotiating a new contract for 6,600-plus US workers of the Boston-based conglomerate, including nearly 1,400 at the jet engine plant in Lynn.
GE, you may have noticed, is in the midst of a rapid retrenchment. Business lines such as lighting and train engines are being divested, and massive job cuts are underway as GE executives try to bring the company’s storied-but-struggling power business back into the black. Wall Street is bracing for a negative cash flow this year
Companies don’t usually flaunt their money problems. But GE reps started meeting with unions last week in Cincinnati to hash out a new labor agreement, and those financial difficulties might just come in handy at the bargaining table. A four-year national contract expires June 23, and the pressure is on both sides to come up with a new contract before time runs out.
Stock price falling off a cliff? Don’t be ashamed. Instead, put it in the spotlight. GE sure did, on a corporate website established to discuss the contract negotiations. The stock price was $26.57 when the last contract was ratified, in 2015. Now, it’s trading in the $10 range. About $180 billion in market value has evaporated over the past four years.
In other words, these are lean times.
In a video interview on the website, Paul Lalli, GE’s lead negotiator, offered context. Cost-control is paramount, Lalli says. GE will eliminate $500 million in corporate costs by 2020, and new chief executive Larry Culp has pared back the shareholder dividend to near-invisibility.
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(The implication: We all need to share the pain.) Lalli says GE wants to negotiate a package that properly rewards employees while making the company financially competitive.
In this environment, Carney says job security has to be his number one priority. That means stronger language about the company working with the union first before trying to shut a plant, for example. The best health care and biggest pay hike in the world don’t mean much if your plant closes.
The IUE-CWA says the situation unfolding in Salem, Va., underscores these concerns. There, GE is ending the manufacturing of turbine controls. Roughly 250 people will lose their jobs next month. A local chapter of the IUE-CWA made a financial case to keep the plant, but it wasn’t good enough for the company. GE, the union says, is sending much of that work to India.
Meanwhile, Carney says, GE got around its unions by opening a new aviation factory in Alabama last year with nonunion labor and expanding another one in that state this year. They say we’re partners, Carney adds about GE management, but we’re only partners when they want something.
Strong words. But this kind of bluster isn’t unusual at the start of high-stakes contract talks. (A GE spokesman declined to comment on Carney’s union-busting allegations.)
These negotiations do not have a direct connection to the ongoing tumult in Europe that has kept GE in the headlines. GE is making cuts to its power-division there, in large part because of an ill-fated acquisition of Alstom’s energy business in 2015. To win government support in France for that deal, GE promised to add 1,000 jobs. Now, GE is slashing a similar amount.
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In the united States, unions represent just a small portion of GE’s overall workforce. As of Dec. 31, GE employed roughly 97,000 people in this country, out of 283,000 worldwide. (The count is likely to be smaller now, as GE has since divested a few more business lines, including its train division.)
GE’s retrenchment has shaken morale. Lalli and his team in Cincinnati may want to keep this in mind as they aim for the right balance in the negotiations.
Larry Culp probably realizes he has to keep the troops happy to pull off a revival. Their loyalty could prove more important than ever as Culp tries to steer this battleship toward prolonged profitability.