WASHINGTON, DC – General Electric (GE) has often faced criticism from organized labor for pioneering the outsourcing of American jobs. The company’s greener-pastures tactics were epitomized by former CEO Jack Welch in a famous quote: “Ideally, you’d have every plant you own on a barge to move with currencies and changes in the economy.”
But earlier this month, at a high-profile event at the Newseum underwritten by GE and hosted by The Atlantic Magazine, current GE CEO Jeff Immelt insisted that higher shipping costs have spurred the company to begin bringing jobs back.
“You go from a world where oil is $12 a barrel, for 30 years, to $120 a barrel [now] — the length of time it takes to ship something is actually quite material,” Immelt explained.
He was careful to note, however, that this doesn’t mean all manufacturing will return from overseas.
“We are a global company. I am never going to apologize for that,” said Immelt. “We will create jobs here, we will also create jobs in China, and we will also create jobs in a lot of different places. But by the same token I think there is a competitive structure that does work for the United States, and it’s based on proximity to market, a highly skilled workforce [that’s located near] materials, and the ability to innovate quickly.” (Full disclosure: My father, Gene Elk, is a union representative for UE and represents GE workers.)
Indeed, many experts agree that the costs savings of moving work overseas has greatly diminished. But that’s not necessarily good news for U.S. workers. Harold Sirkin, a senior partner at the Boston Consulting Group, recently told the Toronto Star that the labor cost savings of making goods in China versus the United States would be equalized by 2015 as a result of falling wages in the U.S. Since 2009, as many as 500,000 manufacturing jobs have returned to the U.S., but, as a recent Washington Post article noted, those jobs tend to be non-union and low-wage.
At the Atlantic event, panelist CBS News Correspondent Margaret Brennan asked Immelt about the claims that these insourced jobs are not always as stable or well-paying as previous manufacturing jobs. Immelt replied:
We still add a lot of people every year to the company. They get a healthcare plan and a pension plan, [which] have changed to be more competitive for new employees. [Eds’ note: New GE employees no longer receive pensions, but rather, more financially risky 401ks.] We still like having a GE company. We think culture is important and we still think its means something to be a GE employee. We have never really given up on that.
In an email to Working in these Times, United Electrical Workers (UE) Political Action Director Chris Townsend, who attended the event, took issue with the implication that GE’s current manufacturing wages make workers proud to be GE employees. Townsend wrote:
We have seen wage cuts on long-service GE workers as large as 45 percent in one swoop. …. When UE responded to calls from GE’s east Houston plant last April — after $4 and $6 hr wage cuts were started — GE crushed our drive with the most massive Union Avoidance push we have ever seen. … We have found a GE plant in New Jersey — GE Healthcare / Vital Signs Devices — which hires assembly workers at $8 an hour and no pension. That’s as low as they can go, and even UE was frankly astonished.
At the Newseum, Brennan of CBS continued to press Immelt:
Brennan: You have seen that push to squeeze productivity out of workers, and wages haven’t raised. … Workers who have been asked to do more with much less.
Immelt: The way you ask that question, Margaret, you make it seem like if you went to any of our factories, this is a Charles Dickens sweatshop. [Laughter erupts in the room.]
Brennan: I am not speaking about your plants, per se, but as a reflection of American business, this is what people want to know…. I am not being accusatory.
Immelt: [The fact that manufacturing pay is not keeping up with productivity increases] is a big problem and it maybe it is a vestige of globalization. But I don’t know how [except by] trying … to drive productivity, trying to develop a good workforce, give people good jobs, and continue to invest in the future.
No journalists on The Atlantic panel sponsored by GE — which included CNBC’s John Harwood and the Washington Post’s Howard Schneider, as well as CBS’s Brennan — challenged Immelt on his repeated claims to have created 13,000 jobs in the United States during the Obama administration.
UE’s Chris Townsend was unhappy with the lack of media watchdogging at the event, saying: “This is the same list [of U.S. jobs created] GE has been using for four years. It’s a mixture of some facts, some promises, and all of it falling between credible and incredible. I didn’t see any mention of the 6,000+ jobs cut in the 40+ plants closed, or announced to close, in the same timeframe.”
To back his claim, Townsend gave In These Times a detailed list of 40 GE plants that had been shut down or slated for closure since 2009. When In These Times sent that list to GE for comment, Corporate Communications Vice President Gary Sheffer responded, “I cannot verify the full list. Clearly some have closed. However, the net is that we have added thousands of manufacturing jobs in the last few years.”
Sheffer emailed In These Times a list of examples of GE growth that totalled 4,565 new jobs since 2008, with several thousand expected in the next few years. Those figures failed to satisfy Townsend. “Let’s sum up. GE claims 13,000 new jobs … This comes to 4,565 jobs,” wrote Townsend. “Where are the other 8,435 jobs? Maybe the Atlantic can send out a search party to find them?”
Atlantic Editor-at-Large Steve Clemons told In These Times by phone that he found the UE’s systematic critique of GE’s job numbers “compelling.”
“I was impressed by institutional awareness of what these various GE lines did, where it came from, and he made smart differentiation between what a GE item made in China is versus a product that was manufactured by real GE workers in America,” said Clemons. However, he would not comment on whether The Atlantic planned to report on the discrepancies.
As this story went to press, GE announced the “temporary” shutdown of 550 jobs at its Louisville, Ky. Appliance Park – a location featured in the Atlantic’s December cover story, “The Insourcing Boom,” as the site of a U.S. manufacturing “revival.”