CORPORATE FOCUS: GE Exploits Cheap Labor

There is probably no more "American" corporation than General Electric -- and no company with more of an anational world outlook than GE.

And no company's record better illustrates the glories of corporate globalization for the well-off, and the misery for the many.

Founded by the American icon Thomas Edison, GE is now headed by Jack Welch, who has said, "Ideally you'd have every plant you own on a barge" -- ready to move if any national government tried to impose restraints on the factories' operations, or if workers demanded better wages and working conditions.

While Welch's 20-year reign has been a golden era for shareholders -- the company's stock value has risen three time more than the Dow average, leading Forbes magazine to name Welch the "Most Admired CEO of the Century" -- it has been a disaster for employees.

GE has slashed its U.S. workforce by almost half since 1986. The numbers are down "because of speed up, downsizing, outsourcing, plant closings, you name it," says Chris Townsend, political director of the United Electrical (UE) workers.

GE has globalized its operations by shifting production to low-wage countries. (And even in these countries, the jobs remain precarious: GE recently shuttered a factory in Turkey to move it to lower-wage Hungary -- and it has threatened to close a factory in Hungary and move it to India. Union officials in Malaysia say they fear GE "putting our plant on a barge and moving to Vietnam," according to InterPress Service.)

Now GE appears no longer satisfied to close its own plants -- it wants to shut down those of suppliers, too. In a startling memo obtained by Business Week, GE Aircraft Engines (GEAE) -- a hugely profitable division -- told suppliers that they would have to move to Mexico if they hoped to continue their relationship with GE. GEAE has held what it calls "supplier migration" conferences in Cincinnati, near its headquarters, and in Monterrey, where an aerospace industrial park is being built.

An internal report on a GEAE meeting with its suppliers says, "GE set the tone early and succinctly: 'Migrate or be out of business; not a matter of if, just when. This is not a seminar to provide you information. We expect you to move and move quickly."

These kind of tactics obviously leave GE's workers (not to mention those in supplier plants) in a weak negotiating position.

New contract negotiations between GE and its unionized workforce in the United States are set to begin later this month, with GE's collective bargaining agreements expiring at the end of June.

In an unusual arrangement that has its origins in the anti-communism that wreaked the labor movement especially following World War II, 14 U.S. unions represent GE workers. Although the unions, including the two unions with national contracts -- the International Union of Electronic workers (IUE) and the progressive UE -- now work relatively well together, the balkanized representation system further weakens labor negotiators.

In preparation for this year's negotiations, the GE Coordinated Bargaining Committee, which includes the 14 unions, has undertaken a corporate campaign. They've highlighted egregious GE practices and generated public support and sympathy. In one sign that they do have some power, efforts to publicize GE's use of pension funds as an accounting profit center (because the $50 billion pension pool is overfunded by $25 billion, GE is able to claim investment gains on the pension funds as paper profits) have resulted in GE agreeing to provide expanded pension benefits.

GE workers have also taken the first steps to deal with the globalization of the company. In March, the International Metalworkers Federation held a meeting in Washington, D.C. to bring together GE union representatives from 20 countries. While they are certainly a long way from global bargaining with the company -- with some progressive unionists cautioning that global bargaining may not even be desirable -- they did agree to meaningful information exchanges and solidarity activities.