Western Railroad Discussion > GE Transportation Closes Spinoff to Wabtec

Looks like this deal has closed and now 1700 union workers in Erie have gone on strike

tomnoy3 Wrote:
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> Looks like this deal has closed and now 1700 union
> workers in Erie have gone on strike

I hope the workers are not sealing their fate.

       Sometimes it makes no difference IF the buyer has decided to lay them all off or pay them such a small wage there is no point in working there. Obviously does not make the new buyer want to hug them all and have them come to their house for supper.

dcfbalcoS1 Wrote:
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>        Sometimes it makes no difference IF the
> buyer has decided to lay them all off or pay them
> such a small wage there is no point in working
> there. Obviously does not make the new buyer want
> to hug them all and have them come to their house
> for supper.

Unfortunately the workers are not bargaining from a position of strength. My understanding is that the old workers and newer workers each have a different pay scale. That usually does not work out well for anyone, labor or owners.

I think if I was on the labor side, I'd pushed for a scale in between, plus enhanced early retirement or severance packages for the older workers. I probably am naive about that. Wabtec likely will shutter Erie and hire less expensive workers down south.

 



Edited 1 time(s). Last edit at 02/26/19 19:51 by ts1457.

Part of the message here is that big companies vote with their feet to control costs.  Texas is a much more business-friendly and tax-friendly state.  That translates into lower costs.  Partly because of Texas' lack of personal income tax and other factors, it also has lower living costs than high-tax states such as Pennsylvania, meaning that workers can have as good a material lifestyle on lower wages.  Under those circumstances, favoring production from the Texas plant over the Pennsylvania plants makes more business sense for GE, now Wabtec Transportation Systems.  Over time, many businesses will flee business-unfriendly states for ones with a more favorable business climate.  Business-unfriendly states--Pennsylvania, New York, Illinois, New Jersey, Maryland, and California (New York and California especially) to name a few--need to wake up or they will be locked into permanent economic decline.  New York and California, in particular, love to crow about how huge their economies are, but that won't save them from falling into permanent decline if they continue their anti-business policies--"the bigger they are, the harder they fall."  The workers in Pennsylvania digging in their heels and going on strike will probably just wind up assuring that the Pennsylvania plants will close.  I have lived in three different states in the last 20 years.  Sadly, two of the three are now under the control of "California-like" left-wing politicians who are now doing their best to destroy the business climate in those states.  Over the long run, that won't have a positive outcome for either businesses or residents.

From a railfanning perspective, some of those "big" states like California used to be a railfan "nirvana" because of all the railroad activity, but business-friendly Texas is starting to eclipse them for railroad activity.

https://www.erienewsnow.com/story/40017733/union-workers-at-erie-ge-negotiate-to-the-wire-with-wabtec

WW Wrote:
-------------------------------------------------------
> Part of the message here is that big companies
> vote with their feet to control costs.  Texas is
> a much more business-friendly and tax-friendly
> state.  That translates into lower costs. 
> Partly because of Texas' lack of personal income
> tax and other factors, it also has lower living
> costs than high-tax states such as Pennsylvania,
> meaning that workers can have as good a material
> lifestyle on lower wages.  Under those
> circumstances, favoring production from the Texas
> plant over the Pennsylvania plants makes more
> business sense for GE, now Wabtec Transportation
> Systems.  Over time, many businesses will flee
> business-unfriendly states for ones with a more
> favorable business climate.  Business-unfriendly
> states--Pennsylvania, New York, Illinois, New
> Jersey, Maryland, and California (New York and
> California especially) to name a few--need to wake
> up or they will be locked into permanent economic
> decline.  New York and California, in particular,
> love to crow about how huge their economies are,
> but that won't save them from falling into
> permanent decline if they continue their
> anti-business policies--"the bigger they are, the
> harder they fall."  The workers in Pennsylvania
> digging in their heels and going on strike will
> probably just wind up assuring that the
> Pennsylvania plants will close.  I have lived in
> three different states in the last 20 years. 
> Sadly, two of the three are now under the control
> of "California-like" left-wing politicians who are
> now doing their best to destroy the business
> climate in those states.  Over the long run, that
> won't have a positive outcome for either
> businesses or residents.
>
> From a railfanning perspective, some of those
> "big" states like California used to be a railfan
> "nirvana" because of all the railroad activity,
> but business-friendly Texas is starting to eclipse
> them for railroad activity.

Well put. New York has little to brag about. Upstate New York is a shell of it's former manufacturing self.

Even 3 billion in aid wasn't enough for liberal Amazon once the rest of the "Charm Agents" decended upon the company. While I was not a fan of the $3 billion, 25000 jobs certainly would have been nice (more like 40000 when support companies are factored in).

Oh well, Governor Cuomo said "we were never that great"! Sadly, due to out migration, fewer and fewer remember a time when that was not true!

Posted from Android

NJ can be a very tough place to do business, or even live.

Expensive, often corrupt and incompetent.  Bad combination.



Edited 1 time(s). Last edit at 02/27/19 13:36 by Lackawanna484.

WW Wrote:
-------------------------------------------------------
> Part of the message here is that big companies
> vote with their feet to control costs.  Texas is
> a much more business-friendly and tax-friendly
> state.  That translates into lower costs. 
> Partly because of Texas' lack of personal income
> tax and other factors, it also has lower living
> costs than high-tax states such as Pennsylvania,
> meaning that workers can have as good a material
> lifestyle on lower wages.  Under those
> circumstances, favoring production from the Texas
> plant over the Pennsylvania plants makes more
> business sense for GE, now Wabtec Transportation
> Systems.  Over time, many businesses will flee
> business-unfriendly states for ones with a more
> favorable business climate.  Business-unfriendly
> states--Pennsylvania, New York, Illinois, New
> Jersey, Maryland, and California (New York and
> California especially) to name a few--need to wake
> up or they will be locked into permanent economic
> decline.  New York and California, in particular,
> love to crow about how huge their economies are,
> but that won't save them from falling into
> permanent decline if they continue their
> anti-business policies--"the bigger they are, the
> harder they fall."  The workers in Pennsylvania
> digging in their heels and going on strike will
> probably just wind up assuring that the
> Pennsylvania plants will close.  I have lived in
> three different states in the last 20 years. 
> Sadly, two of the three are now under the control
> of "California-like" left-wing politicians who are
> now doing their best to destroy the business
> climate in those states.  Over the long run, that
> won't have a positive outcome for either
> businesses or residents.
>
As a Pennsylvania resident, while I am aware that this state's business climate is perceived to be less business friendly than other states, you are overstating this in regards to General Electric.  Wabtec has for years manufactured railroad equipment in Pennsylvania and General Electric had a facility in Grove City, Pennsylvania, which to my knowledge is not threatened with closure.  From what I've read in the media, labor issues and only labor issues have caused GE to shift production to Fort Worth and may threaten the future of the Erie plant.

It's always interesting that those who cite Pennsylvania's higher taxes always compare the state to Texas, North Carolina and Florida - never Indiana, New Hampshire, Kansas, South Dakota or Florida.  This leads me to conclude that people just want to move to a warmer state.

Moreover, in comparing Wisconsin and Minnesota since 2010, the latter has been more prosperous despite former being led through 2018 by a governor committed to cutting taxes and regulations on businesses.

Lastly, I truly think its a mistake for businesses and people to move from water-abundant regions like the Great Lakes to areas where water supply is a challenge.


> From a railfanning perspective, some of those
> "big" states like California used to be a railfan
> "nirvana" because of all the railroad activity,
> but business-friendly Texas is starting to eclipse
> them for railroad activity.

I'll defer to your knowledge about Texas, but I continue to feel that California remains, along with Colorado and Pennsylvania, among the best states for railfanning.



Edited 2 time(s). Last edit at 02/27/19 14:49 by RuleG.

I will try to address some of these comments.  My comments in italics.

RuleG Wrote:
-------------------------------------------------------

> As a Pennsylvania resident, while I am aware that
> this state's business climate is perceived to be
> less business friendly than other states, you are
> overstating this in regards to General Electric. 
> Wabtec has for years manufactured railroad
> equipment in Pennsylvania and General Electric had
> a facility in Grove City, Pennsylvania, which to
> my knowledge is not threatened with closure. 
> From what I've read in the media, labor issues and
> only labor issues have caused GE to shift
> production to Fort Worth and may threaten the
> future of the Erie plant.

Labor issues are very much a business climate factor.   Places that have a history of overzealous labor unions and labor strife can poison the business climate of whole regions.  GE made a conscious decision to expand its production to Texas rather than in Pennsylvania for that very reason.  Often, high population states with a large industrial base ignore what a geography prof I had years ago called "locational inertia."  Locational inertia is where companies will tolerate an increasingly hostile business climate because of the investment and expense required to abandon a location and trained labor force to move to a more favorable business climate.  Public policy makers often misinterpret this as a sign that businesses will tolerate such a hostile business climate indefinitely.  Eventually, however, the business climate deteriorates to the point that businesses either close or find it more economical to endure the cost of relocation, and they wind down their operations in the business-unfriendly environment or just leave altogether.  The ascendancy of the socialized, taxpayer-subsidized highway system has also made many industrial operations much less geographically dependent on specific locations.  Case in point, the auto industry was long locationally favored in the Detroit area because of its ready access to both water and rail transportation for raw materials and finished products.  Highways, among other things, made the auto industry much less dependent  on just those modes of transportation and allowed many of the auto plants to flee to better business climate locales in the South.
>
> It's always interesting that those who cite
> Pennsylvania's higher taxes always compare the
> state to Texas, North Carolina and Florida - never
> Indiana, New Hampshire, Kansas, South Dakota or
> Florida.  This leads me to conclude that people
> just want to move to a warmer state.

Spend any time in Texas and you will know that the climate there, even by many Texas natives'  admissions, is not very pleasant.  Winters are mild, but nearly the whole state suffers from brutally hot summers, with the eastern half of the state usually "enjoying" sweltering high humidity to go with the heat.  Much as Texas tries to tout its "mild"  weather climate, it's the states favorable business climate, not its physical climate that makes it a popular state for business relocations.
>
> Moreover, in comparing Wisconsin and Minnesota
> since 2010, the latter has been more prosperous
> despite former being led through 2018 by a
> governor committed to cutting taxes and
> regulations on businesses.

Neither state wins prizes for its business climate over the long term.  One factor that may be in play here is that Minnesota is somewhat less of an organized labor stronghold compared to the industrial regions of Wisconsin.  Both states have suffered corporate defections over the last few decades.  In the railroading side, one of the most visible was BNSF's abandonment of BN's corporate headquarters in Minnesota for Fort Worth, Texas.  I know several people working for BNSF with knowledge of the workings of that decision and one of the primary factors driving it was abandonment of the Minnesota's high tax climate for the much tax-friendlier environment of Texas.
>
> Lastly, I truly think its a mistake for businesses
> and people to move from water-abundant regions
> like the Great Lakes to areas where water supply
> is a challenge.

I do agree with this.  With the exception of the Pacific Northwest, just about everything west of the 100th Meridian is water-deficient.  This will likely become the final factor limiting population and economic growth in most of the Western states.  Once again, though, Texas is at least partly an exception.  While the portion of  Texas west of the 100th Meridian is indeed semi-arid to arid, the eastern portion of the state is actually fairly well-watered, numerous places getting more average annual precipitation than many Midwestern locales.  While periodic droughts may cause short term water issues in the central and eastern parts of Texas, that portion of the state seems to suffer more from too much water in some years, rather than too little.
>
>
> > From a railfanning perspective, some of those
> > "big" states like California used to be a
> railfan
> > "nirvana" because of all the railroad activity,
> > but business-friendly Texas is starting to
> eclipse
> > them for railroad activity.
>
> I'll defer to your knowledge about Texas, but I
> continue to feel that California remains, along
> with Colorado and Pennsylvania, among the best
> states for railfanning.

Yes, California, Colorado, and Pennsylvania are attractive railfanning states, particularly because many of the railroad lines there traverse some very interesting and scenic geography.  Of the three, however, Colorado (and I happen to be a Colorado native, though I no longer live in that state)  continues to lose more and more of its railroad infrastructure, much of it being some of its most scenic and interesting lines.  The collapse of the Colorado coal industry has put literally most of the state's railroad infrastructure west of the Front Range in jeopardy--even including the Moffat Route.  Colorado railfanning may soon be limited to the few rail operations on its Eastern Plains and along the Front Range,  its tourist railroads, and looking at abandoned railroad grades.  By the way, Colorado has enjoyed some "darling" status as having a positive business climate, but that climate is totally biased toward white-collar business.  The Colorado  business climate is becoming increasingly hostile, though quietly, toward agriculture, resource extraction, and heavy industry.  Heavy industry, in fact, has been abandoning the state for years.  In short, the industries that support railroad transportation are the ones under assault in Colorado.  Not good.



Edited 2 time(s). Last edit at 02/28/19 07:09 by WW.

WW Wrote:

The ascendancy of the socialized,
> taxpayer-subsidized highway system has also made
> many industrial operations much less
> geographically dependent on specific locations. 
> Case in point, the auto industry was long
> locationally favored in the Detroit area because
> of its ready access to both water and rail
> transportation for raw materials and finished
> products.  Highways, among other things, made the
> auto industry much less dependent  on just those
> modes of transportation and allowed many of the
> auto plants to flee to better business climate
> locales in the South.

WW,

While I otherwise agree completely with your reply, on this subject, the facts do not support your point.

Ford was practicing "forward production" of automobiles almost from the beginning. Ford's were built in LA, Buffalo, Charlotte, Edgewater,NJ, St. Paul and many other locations in the 20's. In fact, the Rouge Complex shipped massive quantities of parts all over the country long before it built it's first car (a Model A) in 1928.

In fact, California was the second largest auto producing state in the nation from the 1950's until 1981. The state had two Chrysler, two Ford and three major GM plants. All but one of the GM plants were closed by 1992. The remaining plant - Fremont was closed (1983) and reopened as a JV with Toyota. After it reopened, this plant received most of it's material in containers from Japan. (Today this is Tesla's Fremont Plant).

A similar point can be made about plants on the east coast. A list of plants once included Framingham, MA, Tarrytown, NY, Mahwah, Linden, Methuen NJ, Wilmington and Newark, DE, Baltimore, MD and Norfolk VA. Both Ford and GM had large Atlanta area operations. Not a complete list to be sure.

While coincidental, the attraction of forward product had gone away altogether even as highways have improved.

Posted from Android



Edited 1 time(s). Last edit at 02/28/19 11:49 by NYSWSD70M.

fbe Wrote:
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> https://www.erienewsnow.com/story/40017733/union-workers-at-erie-ge-negotiate-to-the-wire-with-wabtec

Thanks for the link. For anyone who still cares, here's an excerpt explaining the management's side:

"We are interested in putting the Erie plant on a more competitive footing with certain proposed work rules similar to the terms at our UE-represented plant in Wilmerding."

Wilmerding, Pennsylvania is about 150 miles of Erie, PA. If "2 tier pay scale" is the concern of the GE workers, then they are trying to look out for the new hires, as they seem to be entitled to the GE agreement. Should be interesting to see what the Wabtec workers think about the strike, especially if they can benefit from the GE work rules.

Every ~186 shares of GE will translate to 1 Wabtec share, or ~$2000 worth of GE will translate to ~$74, or 3.7% pay off to GE shareholders. Interesting that there's that pump-and-dump looking chart for Wabtec to go from $73 to $80 back to $74 on 2/25.