New York (CNN Business)General Electric just spun off its century-old railroad division to Wabtec. Factory workers immediately went on strike to protest the new owner's push for mandatory overtime and pay cuts for new hires.
About 1,700 union workers at Wabtec's newly acquired locomotive factory in Erie, Pennsylvania, walked off the job on Tuesday morning. Workers at that factory haven't organized an open-ended strike since the 1969-1970 GE-wide strike that cost the conglomerate dearly.
United Electrical union representatives and Wabtec (WBC) failed to reach a short-term agreement that would have kept in place the working conditions negotiated with GE (GE), the factory's longtime former owner.
"I was naive enough to believe that a new company taking over would be a breath of fresh air," Brad McCurdy, a powerhouse electrician with 14 years of experience at the factory, told CNN Business. "Boy, it looks like I was wrong."
McCurdy said the union is willing to fight "as long as it takes" to protect its future. "I don't know if the company realizes this union's resolve."
GE completed the spinoff of GE Transportation, which includes the Erie facility, on Monday as the conglomerate continues to dismantle itself to pay down massive debt. GE, an early pioneer of the locomotive industry, received $2.9 billion in cash as well as a 24.9% stake in Wabtec. GE shareholders also received Wabtec shares in the deal.
Wabtec pushed for a number of significant changes, including the introduction of mandatory overtime, arbitrary schedules, wage cuts of up to 38% for recalled and new workers, and the right to use temporary workers, according to the union.
General Electric completed the spinoff off its century-old railroad division on Monday. The Erie, PA locomotive factory is facing its first open-ended strike since 1969-1970.
"The plant has been highly profitable under the existing GE contract," Jonathan Kissam, UE's communications director, told CNN Business in an email on Tuesday. "It's really not clear to us why Wabtec is demanding such steep concessions."
Kissam said that there are many factory workers whose parents worked at the plant, which makes locomotives.
"They are unwilling to sell out their own children by agreeing to a permanently lower wage for new hires," he said.
Wabtec defends 'exceptional' wages
Wabtec, formerly known as Westinghouse Air Brake Technologies, emphasized that the company's offer would preserve wages for current employees at $35 an hour.
"It's a pay scale that is exceptional for that region," said Wabtec spokesperson Deia Campanelli.
She added that Wabtec is only asking for "reasonable" scheduled overtime "when necessary to meet a customer commitment."
The overtime and lower wage for new hires reflects a desire by Wabtec to make the plant more competitive internationally.
"We need to get the Erie plant in a position for success," Campanelli said.
Sanders slams Wabtec
Senator Bernie Sanders said in a statement on Tuesday that he's "proud to stand with" the 1,700 Wabtec workers fighting for "decent" wages and working conditions.
"The American people are sick and tired of corporate America and their wealthy CEOs ripping off the working families of this country," said Sanders, a Democratic presidential candidate.
Noting that Wabtec has received nearly 50 federal government contracts over the past two years, Sanders said, "The word must go out: any company that does business with the federal government must treat its workers with respect."
Wabtec's Campanelli said the company is treating employees with the "utmost respect and giving them a generous wage rate that is beyond standard practice in that region."
Wabtec, which is set to replace Goodyear Tire & Rubber (GT) in the S&P 500 on Wednesday, said it has already settled with the other unionized facilities associated with GE's business.
Workers feel 'disrespected'
GE declined to comment on the strike. GE CEO Larry Culp hailed Monday's closing of the Wabtec deal as "another important landmark" that would be a positive for all parties.
It's unclear how much money the strike will cost Wabtec and GE each day.
Wabtec said it has "contingency plans in place to ensure operations continue."
Kissam, the union communications director, said that the factory won't be able to fill locomotive orders because of the strike. He said that the non-union assembly plant, located in Fort Worth, Texas, has struggled because of a lack of skilled workers.
"Initially our members were fairly optimistic about the spinoff," Kissam said. "They didn't have a lot of confidence in the current GE leadership."
But now the factory workers "feel pretty disrespected" by Wabtec, he said.
