Lynn-Based GE Plant Considers MigrationBy Saurabh Asthana and Julia K. Steinberger
Boston and the surrounding metropolitan area were once some of the premier manufacturing areas in the country. In fact, the main General Electric plant in Lynn, Ma., has been there since 1892. But profit threatens to change the economic landscape of the Boston area, as companies like GE export their business abroad.
GE’s CEO Jack Welch has begun a new push to move GE’s work-force to the so-called “low-cost poles,” those areas of the world where labor is cheapest -- East Asia, Eastern Europe, and Mexico and South America. According to Business Week’s estimate, GE has moved 30,000 jobs to Mexico in the past two decades.
GE maintains that simple market pressures force it to export its labor overseas. According to GE’s general manager in Lynn, Timothy J. Noonan, it’s very straightforward: “GE is in the business to make money for its stockholders.”
“Right now we’re in a good position. We have good market share. We’re number one, and we want to stay that way,” Noonan said. GE must remain competitive in order to keep ahead of market rivals.
GE urges suppliers to move too
GE is not only moving its own labor; it is encouraging its suppliers to move with it. Last April, GE held a “supplier migration conference” in Monterrey, Mexico, where it is urging its subcontractors to relocate.
Jeff Crosby, president of IUE local 201, the union which represents the majority of GE’s workers in Lynn as well as the workers at GE subcontractor Ametek Aerospace in Wilmington, about the details of the conference. Crosby received the details in documents leaked to him by Ametek management.
GE claims it is not urging its subcontractors to move. “It’s simply not the case,” Noonan told the Lynn Daily Evening Item. “GE is not moving to Mexico, and we are not forcing subcontractors to move.”
But the documents Crosby received tell quite a different story. “Migrate or be out of business not a matter of if, just when,” and “We sincerely want you to participate, but if you don’t, we will move on without you,” GE reportedly said in the documents.
Ametek Aerospace produces aircraft engines, which according to Crosby pulled in $1.7 billion of last year’s $10 billion -- it was GE’s most profitable division. This is the first time GE Aircraft Engines has attempted moving production overseas, and no one is sure the move will work.
But few are willing to speak up. Suppliers in Evendale, Ohio, who received similar urging to move in December of 1999, told the Cincinnati Business Courier, “They are suggesting the how along with the what. It takes away the freedom to run your own business. No one else is doing a full frontal assault like this.”
Crosby says he has already received word of 84 jobs being cut at Ametek. And Ametek managers are working out the details of a move south. Crosby is uncertain how the problem can be settled in the long run. “As long as we’re making eighteen dollars an hour, and some worker in Mexico makes six dollars a day, I don’t think it’s going to change.”
By most post-NAFTA estimates, Crosby says, Mexican wages have been declining, even as foreign direct investment increases, and Mexican labor unions are poorly organized at best, making them all the more appealing to GE.
“They’re profitable beyond the kings and the pharaohs. No one has ever walked where they walk,” Crosby said. “These are decisions made by people. Behind the unseen hand, there are corporate leaders making decisions, and they’ve got to be held responsible for what they do.”
GE more prosperous than ever
With soaring profits and good prospects on every front, GE represents the quintessential American corporate success story. It dominates entire industries and has factories and suppliers all over the United States and the world. GE made 10.72 billion dollars in profits last year. “We think it’s the first time a company has been above $10 billion for a year,” said Gary Sheffer, a GE spokesman.
GE’s success is largely credited to Welch, who has, according to GE figures, raised profits from $1.6 billion in 1981 to $10.7 billion last year. Welch made $97 million in 1998, and is perhaps one of the most effective cost-cutters ever, eliminating 100,000 jobs in the 1980s.