2 Faces of GE’s ‘Welchism’: One Dr. Jekyll, One Mr. Hyde
Lemuel Boulware, who controlled labor relations for General Electric from 1947 to 1960, was so tough, so uncompromising in his dealings with unions that his “take-it-or-leave-it” style of negotiating union contracts brought a new word into the labor relations lexicon: Boulwarism. But union membership was not affected by Boulware’s tactics. It remained high.
In sharp contrast, General Electric’s current, confrontational chief executive, Jack Welch, has inflicted severe damage to GE’s unionized work force since taking over in 1981.
His system of drastically eliminating union jobs without openly fighting with unions might be called “Welchism.” If it sets a pattern for other corporate executives faced with domestic and international competition, it may make Boulwarism look like a picnic for the labor movement.
William Bywater, president of the International Union of Electrical Workers, which represents the bulk of GE’s production workers, calls Welch “a kind of Dr. Jekyll and Mr. Hyde.”
Bywater’s description makes sense. At times, Welch seems genuinely eager to help his employees--those, that is, who survive his constant restructuring of GE. And Welch encourages efforts to make the remaining jobs more interesting while he pushes for increased productivity.
Although Welch steadfastly fights any new union representation efforts, he also has taken some steps to improve relations with the unions at GE. For instance, in 1985 Welch accepted a union contract proposal for an agency shop provision. That means that all workers in a plant where a union has won a representation election must either join the union or pay a fee for the benefits the union provides, such as the gains they get from union contracts.
Since more than 90% of workers in the IUE bargaining units at GE had joined the union even before they had an agency shop, Welch wasn’t making a generous concession to the unions.
But a corporate executive who really is out to break unions never would OK a contract provision that is designed to increase the union’s strength. Welch did, in his Dr. Jekyll phase.
And he has agreed in union contracts to a provision sought by all unions: a commitment to give substantial advance notice to workers if GE plans to shut down a plant.
Also, as the good-guy Dr. Jekyll, Welch strongly supports the so-called Japanese style of labor-management cooperation designed to minimize strife and give workers a real voice in decisions that affect their jobs.
The system seems to be thriving at GE’s highly automated refrigerator plant at Appliance Park in Louisville, where the company is spending $1 billion to make the facility what it calls the “factory of the future.”
Non-adversarial labor relations are spreading to other GE plants, just as they are in other giant companies such as General Motors and Ford.
But in his bad guy Mr. Hyde role, Welch scorns a critical need of all workers: job security.
Ford and GM recently negotiated halfway decent job-security contract provisions with the United Auto Workers, well aware that they promote company loyalty and a willingness by workers to find ways to increase productivity when that doesn’t translate into job cutbacks.
But few GE employees--even top corporate executives--know whether they are going to have a job the next day.
Welch has eliminated about 100,000 workers from GE’s payroll and cut the corporate staff from 1,700 to 1,000 since he took over the top spot at GE. Employment at the huge Appliance Center has dropped from 19,000 to 10,000, but the situation has now stabilized.
There is increasing bitterness among the remaining 87,500 unionized GE workers in the United States over Welch’s policy of shutting down or selling divisions of the company that are doing well but are just not profitable enough to suit the profit-oriented, not people-oriented, chief executive.
He plans further employment cuts and already is seeking contract concessions--to cut labor costs even in profitable divisions. Negotiations will start soon to replace contracts that will expire in June.
When he took over, GE had about 400,000 workers worldwide. The total now is around 300,000, including 250,000 in this country.
And his impact on unions has been devastating. Just seven years ago, more than 70% of GE workers were unionized. Now only about 35% are union.
Boulware at his worst never managed to weaken GE unions that much.
Welch has not hesitated to shift work from union to non-union plants. But on occasion production has moved in the opposite direction, which supports his contention that he isn’t motivated by an animus against unions.
Naturally, union leaders and their members resist the shift to non-union facilities. For instance, the Sheet Metal Workers Union has started a boycott of GE products because the company has announced that in about two years it will move hundreds of union jobs from Cicero, Ill., to a non-union plant in Decatur, Ala.
“Our members in Cicero must be in one of those Mr. Hyde operations,” said Sheet Metal Workers President Edward J. Carlough. He predicted confidently that GE will be forced to reverse that “very unwise” corporate decision because of the union’s boycott of GE products and pressures on GE’s financial divisions, such as Kidder Peabody.
The loss in union membership at GE stems largely from the company’s restructuring. The giant company once earned almost all of its money by making turbines, motors and a host of electric appliances, hence its name, General Electric. More than 70% of its workers were in blue-collar, unionized production jobs.
Now GE gets about 70% of its earnings from high-tech, services and plastics divisions, which never have been unionized, and by handling money through the GE Credit Corp., Employers Reinsurance Corp., Kidder Peabody and other financial divisions.
The Boulware style of labor relations didn’t cost any union jobs. But his system of putting his contract proposal on the bargaining table and telling unions to “take it or leave it” kept labor relations in a constant state of agitation.
Boulwarism led to a devastating, 101-day strike in 1969. As a result, GE discarded the system, and there has been no company-wide strike since Welch took over.
But contract talks will start soon between GE and its unions, which jointly negotiate with the company through their “coordinated bargaining” system.
Despite increasing unrest among union workers, a strike can be avoided if Welch will get into his Dr.Jekyll phase and show at least as much concern with workers as he does for profits.
U.S., Canadian Unions See Trade Pact Dangers
Their chance of success seems slim, but unions in both the United States and Canada are trying hard to defeat the U.S.-Canadian Free Trade Agreement when it comes up for ratification in the Senate and the Canadian Parliament.
When he signed the pact on Jan. 2, President Reagan called it an example “the entire world should be pursuing. (It is) an agreement that eliminates tariffs, opens markets and will create jobs on both sides of the border.”
So far, no major opposition to the agreement has developed in the Senate, but the Canadian unions and the AFL-CIO correctly warn that there are potentially serious dangers.
The latest denunciation of the pact comes from Jack Sheinkman, president of the Amalgamated Clothing & Textile Workers Union, who said: “It is mythology, not reality, that many new jobs will be created. We think the U.S. government ought to be spending its efforts in the trade area seeking to reduce the enormous, and growing, trade deficit rather than negotiating agreements that may add even more to that deficit.”
Some jobs, he predicted, will move to the United States, but just as many will go to Canada.
The agreement does contain rules designed to prevent goods from other countries from illegally slipping into either the United States or Canada under the new free trade agreement.
But Sheinkman insists those rules are so complex and unenforceable that “unscrupulous importers” will be able to flood both the United States and Canada because of the “inability of customs to properly monitor the trade that flows across our huge, porous border.”
There is sentiment in Congress for “fair trade” instead of “free trade” legislation, and despite the support in Washington for the new agreement with Canada, the combined strength of the unions in both countries may be enough to block the pact.