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2 Faces of GE's 'Welchism': One Dr. Jekyll, One Mr. Hyde

January 12, 1988|HARRY BERNSTEIN

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."

Los Angeles Times Tuesday January 19, 1988 Home Edition Business Part 4 Page 2 Column 6 Financial Desk 1 inches; 32 words Type of Material: Correction
Harry Bernstein's Jan. 12 labor column incorrectly reported the percentage of General Electric workers who were in unions 20 years ago. The company says that 50% were union members then and 35% of its employees are in unions now.

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.

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