Three years ago, General Electric threatened to close its West Burlington manufacturing plant if workers didn’t agree to nearly $8 million in cuts to wages and benefits. GE also negotiated with the City of West Burlington, the State of Iowa, and Des Moines County to keep the plant open for at least five years employing a minimum of 190 workers in good paying jobs in exchange for an additional $2.4 million in tax incentives.
In the intervening three years, there has been no public report on the company’s progress. So on October 23, 2013, workers, elected officials, and community members gathered to talk about the fate of the plant and corporate accountability for the tax breaks GE demands. The event was co-sponsored by Iowa Citizens for Community Improvement Action Fund, Iowa Federation of Labor, Iowa Policy Project, Center for Worker Justice of Eastern Iowa, Des Moines/Henry County Labor Council, Iowa State Council—Communications Workers of America, and Iowa Citizen Action Network.
GE has been one of the largest and most profitable corporations in U.S. history and remains so. GE just announced that its net income for the third quarter of 2013 was $3.5 billion. Over four of the past 11 years, GE reported more than $22 billion in U.S. profits. Yet despite these profits, it paid no federal income taxes and received $4.8 billion in tax rebates. While not paying its fair share of federal income taxes, GE also pocketed $21.8 billion in taxpayer-funded contracts from the U.S. government between 2006 and 2012. However, these profits and contracts have not resulted in growth of US jobs. Over the past ten years, GE cut its US workforce by 15,000 while adding 30,000 jobs overseas.
Altogether more than 60 people gathered at the Memorial Auditorium in Burlington to discuss these facts and ask these key questions: Has GE successfully used the millions they received to put the plant on a competitive footing? Is GE’s plan to continue to invest in the plant and remain in West Burlington indefinitely, or is GE just intending to “take the money and run”?
One of the panel speakers, West Burlington Mayor Hans Trousil, who negotiated the deal to save the jobs in his town, explained it this way, “Our contract requires GE have 190 employees through 2016. They are at 242 right now, so there has been an increase. But off course it was the employees who took the brunt of concessions. I was fortunate to come out of UAW with a good pension, and I think the concessions the GE workers had to take were very wrong.”
Mark Jondal, who works at the plant and was one of the workers who took cuts to wages and benefits that amounted to as much as a 30% decrease, noted that many of the additional jobs were not in manufacturing positions but in management. “It is time for GE to stop taking and start re-investing in our community.” He added that, in fact, management positions have received pay increases since 2010 while the rank and file workers were taking cuts.
Trousil commented that going forward, “it’s harder to maintain what we have been able to provide to GE and still maintain our city services.”
One of the overarching themes of the night was accountability from corporations who demand tax credits and other concessions to keep their plants open. Cherie Montice from Iowa Citizens for Community Improvement, one of the forum’s sponsors, added, “Where did the money go? Did they upgrade the plant? You have the right to ask these kinds of questions and get straight answers.”
David Osterberg from Iowa Policy Project criticized these types of economic incentives, “Corporate tax credits are excessive and they’re unaccountable.” One of the main reasons he explained for continued economic policies that grant these types of credits is because, “corporate lobbyists have a huge presence in our capitol. If the state would close just one corporate tax loophole it would have an additional 60 million each year.”
Mike Owen also from Iowa Policy Project said that there is one investment that has been proven to be effective at improving the economy: Education. However, the state has been able in recent years to claim that revenue is down and consequently had to lower the allowable growth rate for school funding. But, he added, “When times are good they say let’s give tax cuts, and when the economy goes south again they say we gotta cut again. This formula is not working.”
But it’s hard to change the way the state practices economic development because they are negotiated behind closed doors. “These decisions about economic development policy have to be public and transparent.”
Senator Courtney added, “The economic policies do not change until you change the Governor.”
Another speaker was Jerry Carney, a worker from a Kentucky GE Plant, who talked about a similar situation they faced in 2008. Carney said, “We work for one of the greatest of companies but also one of the dirtiest.” When the housing market crashed in 2008, so did the refrigeration market. Their plant went from 2000 to 200 employees. After negotiating, the workers agreed to a pay freeze and management agreed to reinvest a billion dollars into the plant and bring manufacturing lines back from China and Mexico.
Carney also criticized Iowa’s Right to Work law saying that states like Iowa depress workers’ rights using the excuse that they need to do this to stay competitive. However, Kentucky is a free bargaining state, and it is adding jobs, “Reality is we have to compete globally, but Kentucky is not a right to work state and it is adding jobs. Iowa can do the same.”
Carrie Duncan, a member of the community who works at the local munitions plant expressed her concerns about corporate welfare demanded by GE and other companies that pay a tax rate less than the average family. “I am proud of the work I do. There have been many nights when I went into work and thought about what an important job I have. While the rest of the world is sleeping I was working to keep the US safe.” She added that while workers are being held accountable to pay taxes to fund our government and keep the country safe, “companies like GE are more concerned about avoiding taxes than keeping good jobs in the US.”
One of the last speakers of the night was Jeff Kurtz with the Brotherhood of Locomotive Engineers and Trainmen. He reminded everyone that it is not just decent wages that are a concern when discussing economic development and the need to retain jobs in the United States. He told a story about a train accident that occurred last year. Though the crash was initially caused by worker fatigue, the train, which was made in Mexico, had a safety mechanism failure and the 22-mile an hour crash resulted in that worker’s death. Though GE didn’t manufacture that particular train, they do make many of the trains he and his coworkers drive, and he is concerned that as more of the manufacturing is done by non-union plants, and many of the parts are imported from overseas, safety and quality could be jeopardized.
The coalition intends to continue to ask GE to keep their promise and make a commitment to keep their West Burlington plant open. Ryan Drew, President of the Des Moines Henry County Labor Council is working with the ad hoc coalition on a follow up letter to GE listing some of the big questions that came up at the forum such as, how has GE invested the money they saved from wages and taxes to make the plant more efficient? How much was spent between October 2010 and October 2013 on salary increases and bonuses for non-production employees? And finally, what new product lines will be brought to the plant in the next two years to ensure its competitiveness and worker jobs? If you have any questions or concerns, or want to learn more about this or other issues, please contact the Iowa Federation of Labor, 515-262-9571.