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GE Transportation Layoffs:
"It's Déjà Vu All Over Again"
 That is probably Yogi Berra's most famous
line, and is the first thing that came to mind today when I read in the local newspaper
where GE Transportation
(formerly
this website)
here in Erie, Pennsylvania, plans to layoff 950 production and 100 management employees.
An additional 200 "temporary" layoffs could also occur. Rumors have been in the
works for a couple years regarding an eventual total plant closing, since a new
plant with the same capability (and more) was being established in Fort Worth, Texas.
The Erie location is totally unionized, and Texas is a Right-to-Work state (union
membership not mandatory). In an effort to be "globally competitive," labor rates
must be kept as low as possible - for everyone, not just production workers. Texas
also has no income tax, which helps keep wages low as well. Property taxes in Erie
are quite high, typical of the Northeast. Per public records,
Mr. Lorenzo Simonelli,
GE Transportation's CEO since 2008, saw his taxes go from $14k in 2011 to $22k in
2012 -- for a mid-level condo. Property taxes in Texas are significantly lower.
GE Transportation posted record sales in 2012, and in a newspaper article Mr.
Roger Zaczyk, president of Local 506 of the United Electrical Radio and Machine
Workers at GE Transportation, was reported as saying that he sees those numbers
as evidence that a company can pay union wages and make money. Evidently not. Caterpillar,
Inc., the division's main competitor, recently also announced 2,000 layoffs, and
already their employees were making less than half of what the union workers are
making. Along with the hourly rates are very generous benefits that cost the company
a lot of money. New health care regulations going into effect in January of next
year are prompting a lot of companies to use part-time labor to reduce mandatory
expenses - something union contracts would never abide especially since many unions
are getting exemptions from the rules.
GE Transportation builds state-of-the-art locomotives for worldwide customers.
Until fairly recently, all of the units were assembled entirely at the plant and
then shipped to customer locations. China has been a major customer in the last
two decades and as with all of the other types of technology it gets from us and
other advanced manufacturing nations, it began purchasing locomotives with the stipulation
that part of the assembly be done in-country. The State Department was coaxed over
time to lift more and more trade and technology export restrictions, and eventually
China reached the point where they had the equipment necessary to design and build
their own products rather than to buy ours (and others'). GE now only ships partial
kits - and associated production jobs - to China for total assembly there. Other
countries follow suit. GE Transportation also builds gear boxes for wind turbines,
another part of production that will be likely be gone from here soon. Oh, and GE
Transportation's management HQ was moved to Chicago last year.
During the summer of 2008, Mr. Lorenzo Simonelli was brought on as the new CEO
of GE Transportation, at the height of the plant closing concern and when news of
the new Texas plant was hitting the headlines. In the beginning, the company completely
denied any plans to move Erie production to Texas; it was merely an additional capacity.
It even announced $140 million in local upgrade plans and made $15 million in donations
to the local school system. That's when I was pretty sure that Simonelli was a classic
corporate "hatchet man" (I could be wrong). I've seen it before over many decades
of following tech industry news - although the pattern is not unique to the tech
sector. It happens over and over again in virtually the same way. Here is a job
requirements list for a hatchet man that could be from any Human Resources department:
- Must have no association with the particular business sector. Previous employment
with the company acceptable but outside guy preferred.
- American citizenship not necessary.
- No family ties (wife, children) a plus.
- Ability to secretly plan and execute a devious scheme of denying any layoffs
or plant closures required.
- Frequent travel to new plant location required during stealth transition efforts.
- Knowledge of manipulating media sources to put up a good community front is
essential to this position.
- Salary commensurate with degree of good looks and "nice guy" public personality.
Last fall I predicted that shortly after the presidential election there would be
a major announcement regarding GE Transportation winding down in Erie. Holding back
the news helped assure the ire of the unions was not invoked against leaders who
purportedly were looking after members' interests. Recall that
Jeffrey Immelt, the top guy at General Electric, is the president's
top economic advisor so party loyalty is paramount. The also ostensibly pro-union
president has presided over many American jobs going overseas after pumping billions
of dollars into front companies stateside that were supposed to create or save millions
of 'green' jobs. Closing many coal burning electric power plants is partially blamed
for the declining locomotive demand. Texas has a huge Illegal immigrant population,
many of which you can bet will be taking jobs formerly held by our Erie brethren.
BTW, the national union bosses are fully behind the effort to grant immunity and
automatic citizenship to the Illegals. It seems to the big bosses it really doesn't
matter who is paying the bills and supplying votes as long as the deed gets done.
Names and numbers used in this article were obtained from publically available
sources - just 'Google' any of them. Here are a few of the articles from local media
.
Posted April 9, 2013
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