Transportation Layoffs: "It's Déjà Vu All Over Again"
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
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
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
, 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 on 4/9/2013
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