General Electric (GE) announced Tuesday, Sept. 15, that 1,480 hourly employees would be placed on permanent layoff at the Lawrence Park plant located in Erie.
A core supplier to the rail industry, GE has seen an extreme decline in locomotive production .
At this time, GE's railroad customers have more then 5,000 locomotives parked due to a declining freight volume and over capacity.
"Our orders have declined by 70 percent," said Stephan Koller, director of communications and public affairs for GE Transportation. "During the entire year of 2009 we have not received a single locomotive order from our railroad customers in North America."
Their customers are not motivated to order new locomotives because they have no goods to transport.
"Employment levels are tied to production volumes," said Koller. "We are staffed to build a certain amount of locomotives and if you don't have orders then you need to bring your organization in line with these new market realities."
Back in February, GE made the decision to implement a temporary lack of work action for 1,200 hourly employees in Erie in hopes of the market recovering during those times, but it didn't.
The company even tried implementing a set of cost cutting measures to avoid the layoffs including an indefinite wage freeze for salaried employees, reduction in executive compensation and cut backs on corporate events and travel, which in the end roughly saved the company $150 million since September 2008.
"We held off for as long as we could," said Koller. "We were at a point were we could wait no more."
The employees who were on temporary lack of work were recently transitioned to permanent lack of work; in addition to that, GE Transportation notified 230 additional hourly employees as well as 50 salaried employees of workforce reductions.
The diesel engine manufacturing plant in Grove City also notified 200 hourly employees of permanent work reduction.
The 60-day working notification will take effect at the end of November, he said.
"We wanted to give our employees as much notice as we could so they can transition," said Koller.
Close to half of all GE Transportation hourly employees affected by workforce reductions in Erie will be eligible for early retirement benefits.
This not only has a significant effect on the economy, but also local community organizations. United Way's donations are part of the payroll deductions, said Koller. And with fewer workers, payroll deductions will likely hurt the non-profit organizations too.
GE, however, will keep its commitment to the community and all non-profits partners.
"When it came down to discussing do we need to decrease our community relations and charitable donations, everybody from the president and CEO down responded with a resounding 'No'," said Koller.
"You can't step away from that commitment," he added. "We live up to that commitment."
During the more than 100 years GE has been around, they have managed through roughly 20 recessions and have always come out stronger on the other end, he said.
Koller said that 2009-10 will be tough for the business and the community, but he is "very confident that GE will recover from this."
"In this current downturn we are still investing in key technologies that will help the business succeed in the long run and sustain employment moving forward," said Koller.
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