G.E. to Add Two New U.S. Plants as Unions Agree on Cost Controls

For the first time in decades, General Electric is adding new operations at two of its manufacturing hubs, underlining what the company says is a new commitment to producing in the United States.

G.E.

GE loading...

Quote  |  Chart  |  News  |  Profile

[GE  Loading...      ()   ] is building a 350-employee plant in Schenectady, N.Y., to make high-density batteries that will turn many locomotives into diesel-electric hybrids. And in Louisville, Ky., it is adding a factory that will employ 420 workers to produce hybrid electric water heaters — heaters now made in China.

The two moves by G.E., often accused of being too quick to close plants and move operations overseas, came only after its unions agreed to keep costs down by swallowing painful concessions, including a two-tier wage structure.

Jeffrey R. Immelt, G.E.’s chief executive, said the two new operations are part of his campaign to get corporate America to strengthen and expand manufacturing in the United States.

Sounding equal parts prophet, patriot and business executive, Mr. Immelt has in recent weeks voiced deep worries about America’s sagging manufacturing base and huge trade deficit. He has chided America’s policy makers and corporate leaders for thinking the country could prosper by forsaking manufacturing and focusing on financial services.

In an interview on Thursday, Mr. Immelt warned that the United States had lost its competitive edge in many areas — falling behind other countries, for example, in green industries like solar power and wind turbines. He noted that the nation had a trade surplus in high-technology products in 2000, but a $50 billion high-tech deficit in 2007.

“The country has got to get better at exporting for its long-term health,” Mr. Immelt said, echoing a theme in recent speeches and broadcast appearances. “The only way you get better at exporting is you have to get better at manufacturing. The ability to make high-tech products at low cost is something the U.S. has to get good at.”

He said the United States should aim to have manufacturing jobs represent at least 20 percent of all jobs, twice today’s percentage. The nation has lost 30 percent of its factory jobs this decade

Mr. Immelt pointed to the moves in Schenectady and Louisville to make clear that G.E. was putting its money where its mouth is — or was at least starting to. In addition, Mr. Immelt announced with great fanfare in June that G.E. planned to build a $100 million, 1,100-employee research center 25 miles west of Detroit.

Like his predecessor, John F. Welch Jr., Mr. Immelt often tells G.E.’s labor unions that production costs must be competitive to keep factories from closing and moving to Mexico or China.

To help persuade G.E. to expand in Schenectady and Louisville, members of the International Union of Electrical Workers-Communications Workers of America voted to accept a two-year wage freeze and a lower wage tier for new employees. In return, G.E. promised not to move any operations from there for two years.

“Labor sees the need to be more competitive than in decades past,” Mr. Immelt said. “After everything that happened in Detroit, it points to more alignment between management and labor. My sense is this is a different day.”

The union leaders agreed, sort of.

“Bringing any new product line here is great,” said Carmen DePoalo, leader of the G.E. union local in Schenectady.

He voiced dismay about the concessions, including the two-tier wage structure in which new workers will earn around $17 an hour, $10 less than most current workers.

With G.E.’s Schenectady work force falling to 5,000 from 40,000 during World War II, Mr. DePoalo praised Mr. Immelt’s comments about doing more manufacturing in the United States.

“But I’d love to see him walk the talk,” he said. “There are good signs, but you still see that G.E. has a lot of operations offshore. We are positioned better with Immelt than we were with Jack Welch. Immelt understands that manufacturing still needs to be part of this country being successful.”

In Louisville, where G.E. produces clothing washers, dishwashers and refrigerators, the workers voted two-to-one for the concessions to help attract the water heater factory. G.E. says the heaters will save households $250 annually by taking heat from the surrounding air to help warm the water.

“We haven’t had a new product here since the 1950s,” said Jerry Carney, president of the union local in Louisville. “This new product has awoke a sleeping dinosaur. It gave us life.”