GE Appliances workers Tuesday night rejected a new four-year contract over concerns about frozen wages, lower starting pay for incoming employees and changing work practices that disadvantage older workers.
Union leaders declined to reveal details about the vote, which occurred between 6 a.m. and 6 p.m. at the union hall on Poplar Level Road. About 4,000 members of the IUE-CWA 83761 were eligible to vote.
All of the employees interviewed by IL at the union hall Tuesday night said that they voted against the proposal, primarily because they had not received raises in years.
The company said in a statement that it was “extremely disappointed” that members rejected a proposal that would have made changes “that are essential to the ongoing operation of Appliance Park.”
Dana Crittendon, president of the local union, said that he would ask the company to get back to the negotiating table, but he also said that a strike was a possibility.
The proposal called for current employees to retain their wages, seniority and vacation benefits. They also would have received $5,500 combined in January of each of the next three years.
Starting wages for new employees would drop to $12, from $15.52. Employees also would see higher shares of health care costs.
“Nobody likes it,” said Marc Mammone, who works as a material handler on the hot water line in AP2.
He said taxes and higher health insurance costs devour nearly half of $5,500, and at the end of the contract, workers still would be making the same wage.
In addition, Mammone said, the company is placing blame on hourly workers when a lot of the park’s problems stem from poor leadership and a high manager-to-worker ratio. Years ago, one union worker would manage a production line, and fix problems when they arose. Now, Mammone said, workers have to call five or six people, and they usually tell workers just to continue making products and to fix them later.
That approach leaves many products unfinished, damaged or requiring fixes for which workers get paid overtime, he said, making the whole process inefficient.
Other workers talked about production being interrupted for hours because of missing parts and a high number of products being scrapped.
Freeman said Tuesday night by phone that the company strives for continuous improvement.
“The quality of our products, the safety of our employees is paramount to everything that we do,” she said.
No raises for years
April Key, who works on dishwashers, was sitting in a vehicle in the union hall parking lot Tuesday evening, her face illuminated by the glow of her mobile phone as she waited for the results. Key said that she has worked at GE nearly five years and still makes only $15.51. Going without raises for years while dealing with higher costs for household expenses means that she has less money to take care of her family, which includes two children, ages 14 and 11.
Mike Kitchen, who assembles dishwashers, said that he makes the same wage as Key, and that if he had accepted the new contract, he would have gone without a raise for six years.
“I really don’t like any of it,” he said.
Kitchen, who has worked with the company for just over four years, said the lower starting wage of $12 also was not a living wage, and would leave many new hires qualifying for public assistance.
And, he said, the lower wage would increase turnover at Appliance Park.
“We’re going to be training people over and over,” he said.
The company keeps saying that workers will get a raise down the line, and it never happens, Kitchen said. Meanwhile, salaried employees and executives keep getting raises even though the Louisville operation has lost money for years.
“That doesn’t make any sense,” he said.
The members said that adding another lower wage tier also would pit incoming workers against current workers in future contract negotiations.
Crittendon said that older workers disliked the contract proposal’s change to a work practice that fills job openings automatically by seniority, rather than based on skill and experience. The new contract calls for employees to bid on job openings, with a management team selecting who gets the job.
Company officials said that Appliance Park, which employs 6,000 and makes products including dishwashers, air-conditioners and washing machines, is the only one of GEA’s four locations that is not profitable, and wages, among other things, needed to be aligned to the rest of the appliance industry.
GEA Spokeswoman Kim Freeman told IL via email Tuesday that Appliance Park is losing hundreds of millions of dollars per year. She declined to provide specifics but sad the park “has been operating at a significant loss for years.”
The new contract, she said, was “a very important step” toward regaining profitability.
The company said in a statement that the union rejected “a comprehensive and fair package.”
“A workforce that is unwilling to change to improve our operations and cost position could deter future investments in Appliance Park,” the company’s statement read. “While it is our desire to continue to manufacture at the park, we cannot do it to the detriment of our customers and the overall business.”
The proposal, which union and company leaders unveiled last week, had called for the company to invest $90 million in Appliance Park next year.
Tough negotiations with new owner
Crittendon had said the contract would allow the workers to achieve much of what they could hope for in tough negotiations with a new owner. Union leaders also said that not having the clout of other General Electric workers behind them has weakened the local union’s negotiating position.
China-based appliance maker Qingdao Haier bought GEA in June for $5.4 billion from General Electric.
Beth Davis-Sramek, associate professor and Dean’s Research Scholar at the University of Louisville’s College of Business, had told IL that the loss of the corporate parent, which had business units with high profit margins, forced GEA/Haier to lower production costs to compete within the high-volume, low-margin appliance business.
With a $20,000 early retirement package, for which about 20 percent of the employees would have been eligible, GEA had hoped to replace some older, more expensive workers, with younger, less expensive workers. Replacing 800 employees who earn $30 per hour, or about $62,400 annually, with 800 employees who $12 per hour, or about $25,000 per year, would have saved the company an annual $30 million — excluding benefits.
While Freeman said that the new contract would have put wages more in line with the industry, Davis-Sramek said that GEA, with a starting wage at $12 per hour, GEA would lose employees to other manufacturers, including Ford Motor Co., which pays a starting wage of at least $15.78 that is guaranteed to rise to $28 per hour within eight years.