GE Announces Sale of Gear Business

Predict End of Work by September ‘09

     The possibility that Local 201 had anticipated for more than a year became reality when GE Supply Chain VP Scott Ernest announced, in a communication on July 2nd, “the sale of select product lines of our gear manufacturing business to Philadelphia Gear”. He cited “low volume and limited growth opportunities” due to “fewer ships and submarines…being built and the shift in propulsion…to electric drive.”  While the deal with Philadelphia Gear does not include gears for nuclear propulsion of military vessels, GE “will not bid on future contracts” and will “work with the Navy to help them identify sources for any subsequent nuclear gear manufacturing”, according to the communication.
     That same day, in all-employee meetings, Gear Plant Manager Mark Allard clarified that what is being sold is “intellectual property” as well as some “select equipment”.  He reiterated that the Gear Plant will “fulfill current orders and backlog” which will mean that production in the Gear Plant will continue until at least September 2009, when the last unit is scheduled to be completed.  However reductions in the workforce are expected to continue as the scope of the work narrows toward final assembly and shipping.  All future gear sets built to GE’s designs will be produced by other manufacturers.
     Allard further explained that the Gear Plant building is not part of the announced sale and “no decision has been made regarding the future of the building.”  While it is expected that “all employees will be offered other jobs in Lynn or be eligible to apply for SERO [or Bonus retirement],” he acknowledged that “this represents a discontinuance of an existing product line and as such employees are entitled to…78-weeks of rate guarantee and special placement options” (Article 22 language from the National Union Contract). Local 201 has previously been told by Company officials that sale was not expected to cause any layoffs “to the street” of any 201 members.
     While painful, this announcement was no surprise to the Union or to Gear Plant Employees.  The Gear Plant work force has been reduced by almost 100 people since February ’07 through a combination of layoffs and attrition (upgrades & retirements with no backfills).  Despite Local 201’s efforts to convince GE to shift to new product lines in the GP, including Wind Power gearing, and appeals to the Defense Department and other government officials for help, no new work has been brought in, or even seriously bid on, in this period.  Meanwhile management encouraged some of its most experienced front line supervisors and knowledgeable technical staff to look for other positions or retire.  These fact patterns were all pointed to by the Union over the last year and a half as we argued a series of Fundamental Grievances alleging that the Company was exiting the gear business and responsible for Article 22 benefits and procedures.  The Company confirmed “off the record” that this seemed to be where things were headed, and even recently settled some of the Article 22 grievances to the Union’s satisfaction.  On July 2nd the Company announced that they in fact had reached an agreement selling any future Gear business.
     With the announced sale of the business, the Union promptly requested bargaining as provided for in Article 22 and our Layoff and Transfer Supplement (LOTS). 
     The first session was held Monday, July 14th.  Representing the Union at these negotiations is the full GE Grievance Board (BA, Pres., VP, & Bd. Members) and 5 witnesses from the shop: 1st shift Stewards Mike Reidy & Gregg Johnson, 2nd shift Stewards Roger LeMaire & George Hoomis, and 1st shift Hobber Geof Boland.
     Much of the first session involved providing information and clarification of the situation.  The Company has agreed to the Union request to form a replacement committee per LOTS with two Union and two Company representatives to review all Gear Plant placements going forward as to department, plant-wide, and “special placement” ( as provided for in Article XXII).  The Gear Plant still has approximately 120 Bargaining Unit employees.  At this point the Company projects that about 25 reductions will take place in the remainder of ’08, with the rest being moved in ’09, or as work is completed.
     Business AgentCasilli asked the Company to keep in mind a number of points:

A) The historic nature of Gear Plant and the loyalty, allegiance, pride and tradition of many of our members that have seen themselves as “life long Gear Planters”; this is reflected in annual Gear Plant retiree gatherings.

B)  Our union/members co-operation in the recent past crisis of Gear Plant/LCS delinquencies and the membership‘s January 24, 2006 vote waiving contractual rules per management’s request.

C)  Your (Company) anticipated needs to retain some important unique skills during the next 1½ year period, and possibly, some flexibility needs.                          

D)  Trying to minimize disruptions and bumping into AE, and keeping in mind the sadness of the Local and its members seeing this historic treasure being lost after years of lobby efforts with government officials and GE to bring in new types of work, including wind power.

     Taking all these factors into account, we would request consideration of [the] following …proposals…”

     Casilli then proposed that the Company go beyond what the Company believes are its contractual Article 22 responsibilities in order to reach an agreement that would address the concerns of both parties as he had outlined.  The Company has agreed to consider the Union’s proposals and negotiations will continue.