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GE cuts 950 jobs Erie plant, shifts work to Texas

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By Bloomberg News
Tuesday, April 9, 2013, 12:45 p.m.
 

General Electric Co. plans to cut 950 jobs at its locomotive plant in Erie, wiping out most of the site's recent employment growth, as it shifts some production to a lower-cost Texas factory.

The reductions are slated to start in six months pending a 60-day period of talks with union leaders, said Lorenzo Simonelli, head of GE's transportation unit. The new plant in Fort Worth, also the headquarters for Warren Buffett's Burlington Northern Santa Fe railroad, is about 20 percent more efficient than the Erie plant, which is more than 100 years old.

“Cost is becoming more and more of a factor,” Simonelli said “We've got to match our competition and that's what we're trying to do.”

GE had expanded its workforce at Erie by about 1,000 in the past two years to 5,500 as it increased output of locomotives and mining equipment. The plant in Fort Worth, which employs a fraction of that number, began some production in June and started building locomotives in January.

The United Electrical, Radio and Machine Workers of America, which represents about 3,500 GE workers in Erie, said the shift is unacceptable.

“We intend to resist this with every tool at our disposal and to fight tooth and nail to retain all of the work that has always been done there,” Chris Townsend, the union's political director, said.

Erie remains the global headquarters for GE Transportation's locomotive business and will continue to build locomotives as well as components for the Fort Worth plant and overseas factories.

GE's locomotive engine plant in Grove City in Mercer County is not affected by the cost reduction, said spokeswoman Jennifer Erickson. The plant, which employs about 1,000 people, manufactures and rebuilds diesel engines for locomotives.

GE has added 100 people at the facility since December 2011, when it began a three-year investment of $72 million to upgrade the plant.

Transportation and other manufacturing businesses such as health care and energy have been a focus of Chief Executive Officer Jeffrey Immelt's growth strategy. He is shrinking the finance unit because credit-market disruptions in 2008 jeopardized the company.

Industrial sales accounted for more than 65 percent of GE's $144.8 billion in revenue last year, with $5.6 billion coming from GE Transportation.

The Fairfield, Conn.-based company is the world's largest builder of locomotives.

Simonelli said production of Evolution-series locomotives will be increased in Fort Worth, along with wheels for mining equipment, as output in Erie is reduced. About 10 percent of the work now handled at the Pennsylvania site will be moved to Mexico and third-party manufacturers, he said.

About 200 of the Erie job cuts, more than 20 percent, are linked to declining coal demand, Simonelli said. GE's railroad customers have parked about 3,000 locomotives as utilities that once relied on coal carried by trains to produce electricity began switching to cheaper natural gas from shale formations.

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