GE workers have seen better days—better decades, indeed. Nearly 2,000 workers at a General Electric plant in Erie, Pennsylvania, went on strike after workers union accused the plant’s new owner—also its former rival—of playing down and dirty with wages, benefits and working conditions.
Something like this hasn’t happened in the U.S. manufacturing sector in three years. It hasn’t happened at this particular plant in 50 years.
The incoming owner of the factory, Wabtec Corporation, just closed an $11-billion merger deal with GE’s transportation division. The deal includes the Pennsylvania plant, which has been building train locomotives for decades.
The combined company, which has its headquarters in Pittsburgh and its global freight headquarters in Chicago, has 27,000 employees and operates in 50 countries.
The workers union said it had failed to secure a temporary extension of their GE contract with Wabtec, leading them to authorize the strike just one day after the merger.
According to the union, things were better before the merger: workers were satisfied with conditions in the factory and the average pay of $35 an hour. And while they have no problem working overtime for the new owners, it’s got to be voluntary. But the biggest beef was about hiring new employees for lower pay. In fact, according to the union, the new owners were planning to make new hires for around 38 percent lower wages, which could create divisions within the union. Related: China Just Lost Nearly 200 Billionaires
Wabtec says that the new workers would be hired at a “competitive wage” and that a two-tier wage system is necessary to compete in the global market.
“No one ever benefits from a walkout,” the company said. “Employees lose wages and the company’s ability to deliver products to customers on time is jeopardized. Wabtec looks forward to returning to normal operations.”
The fact is that GE had a very bad 2018 with stock plunging 56 percent—and it wasn’t the first time in recent years that’s investors have been burned.
But since the start of 2019, things have been looking up for GE. It’s stock has jumped nearly 47 percent since the start of the year, and investors have been feeling optimistic about GE’s earnings and the deals it’s cut on asset sales so far—sales that will help it fix its horrendous balance sheet after years of poor decision-making and overpriced asset buys. The biggest mess-up was GE’s $42-billion stock buyback—an ill-thought-out investment in a stock that continued to plunge.
It also racked up a pile of debt that left it with $115 billion worth of long-term liabilities and not enough revenue-generating capacity to justify that. It all cost two CEOs their jobs. The latest GE CEO, Larry Culp isn’t faring that well, either—truth be told—but he inherited an ominous task.
To pay down the debt, the company previously pledged to raise around $30 billion in cash from asset sales. And earlier this week, it announced the sale of its biopharmaceutical business to Danaher for $21 billion in cash, the company managed by Culp for more than a decade before joining GE in October. It also said last year that it would spin off GE Healthcare , but it no longer needs to complete an IPO of its healthcare unit after selling its biopharma assets.
It also announced to sell off its stake in oil services group Baker Hughes, and even get rid of its light-bulb division.
By David Craggen for Safehaven.com
