U.S. Taxpayers Bankrolled General Electric. Then It Moved Its Workforce Overseas

When Sam Bansfield first started working as a material handler at General Electric’s Lynn, Massachusetts plant in 2012, she remembers the noise—the loud clanking of her coworkers in the piece-making wing of the jet engine factory.

According to her, it is very quiet today. “You can hear everybody,” she says. “There’s no machines running. There’s not any work.”

Bansfield’s experience resonates across the United States. Since 1989, GE’s domestic labor force has declined by 75%—from 277,000 to just 70,000 workers, according to a new report first reviewed by TIME from the University of Massachusetts, Boston and Cornell University. Part of that decrease can be explained by GE’s decision to sell pieces of its business, including its biopharma and transportation arms. But its manufacturing plants have been gutted too: since the 1980s, production personnel at GE’s Lynn, and Schenectady, New York plants have been cut by 90%.
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This dynamic is indicative of a major economic theme in America over the last 30 years. Since the 1990s large corporations have been outsourcing and downsizing domestic manufacturing in masse. This has been fueled by low labor costs, strong trade agreements and technological innovations. On Tuesday, GE announced that it will divide itself into three public companies—aviation, healthcare and energy.

But GE’s disinvestment in America’s domestic labor force is different, the UMass/Cornell report says, because of the volume of state and federal taxpayer grants, tax credits, and subsidies the company received while simultaneously disinvesting in the U.S. economy. GE has drawn roughly $1.6 billion in federal money since Fiscal Year 2000, plus $687 million in state and local awards since 1992, totaling more than $2.2 billion, according to a nonprofit’s subsidy tracker that the report uses. According to the report, three of four GE-related jobs disappeared over that same period.

For every megawatt-hour of commercial wind power they sell between 2007 and 2016, energy companies were eligible for tax credits worth $25 billion. That program had the indirect effect of increasing both the demand for and price of wind turbines, which left GE—the producer of 41% of the wind turbines operating in the U.S. in 2016—in an enviable spot.

The researchers believe that this would be a good example of a successful public policy story. However, many U.S. workers were left behind in the recent boom: thirteen of 14 LM Power plants that GE lists now are outside the United States, while its only production center for offshore wind turbines is in Saint-Nazaire in France. Five out of six onshore turbine head assembly plants are located overseas.

GE’s approach has affected American workers. Before GE’s 2017 acquisition of LM Wind Power, the Danish-based maker of wind turbine blades, it had relied heavily on American workers for its production. GE placed orders for blades in wind turbines at the Aberdeen, South Dakota facility of a small American company called Molded Fiber. GE had been the plant’s only client. Approximately 300 Molded Fiber Glass workers lost their jobs after GE moved its sourcing overseas.

GE has indicated that it is increasing domestic renewables work. Roughly 500 U.S.-based union jobs off the coast of Martha’s Vineyard will be created to build new Haliade-X wind turbines for a major offshore wind project, says a GE spokesperson. The spokesperson also said the company is considering the “possibility” of opening a facility in New Jersey that would assemble the part of wind turbines that house their electrical generators.

But the UMass/Cornell researchers say such investments don’t begin to offset the amount of public funding GE has received over the years. “Taxpayer dollars—in the form of government contracts and subsidies,” the report says, “have bankrolled GE’s transient approach to manufacturing.”

It is difficult to pinpoint

There is no state or federal entity that tracks exactly how much a company like GE receives in public money—which can include loans, tax credits, grants, or other forms of taxpayer funds. It is often not required to disclose the total amount a company has amassed.

The $2.2 billion in public funds that the researchers say GE received is based on data compiled by Good Jobs First, a non-profit economic watchdog based in Washington, DC that lists GE’s federal subsidy awards going back to 2000. The Library of Congress archives its data.

GE denies the number. GE spokespersons claim that $2.2 Billion includes, among other things, money that states and federal governments have paid to GE for its products, and subsidy payments to companies that were later bought by GE. As an example, Alstom, a power firm, received $68 million worth of subsidies in 2002-2014, however GE only purchased Alstom in 2015. A spokesperson from GE says that $145 million was GE’s repayment to Massachusetts for the $2.2 Billion figure. This is after GE cut back on its Boston headquarters plans. GE did not provide any additional information about the amount of public funding it received during the last 30 years.

Greg LeRoy, the executive director of Good Jobs First, defended the tracker’s methods and accuracy. Because the subsidy payments often play into merger or acquisition deals, it always receives any past subsidy awards. According to tracker, Alstom received federal grants in excess of $12 million last year, before GE bought it. That cash infusion can “clearly accrue to the financial benefit” of a current corporate owner, LeRoy says.

LeRoy added that, if anything, the $2.2 billion figure is likely too low, given GE’s size, geographic reach and tax maneuverability. It is nearly impossible to trace funds that have not been disclosed by local governments or were received in the form corporate income tax credit. Good Jobs First’s LeRoy adds that his researchers were able to identify 68 cases in which GE and its subsidies received public funds, but the dollar value was not made public—and therefore not included in the $2.2 billion sum.

Researchers argue that it is less important to determine whether GE received $2.2 billion or less in federal funds than to examine whether the public investment actually served U.S. objectives.

GE used a $5million state grant, along with a number of tax cuts, to announce a Schenectady multi-million-dollar renovation project. This brought about at least 500 jobs. Half of those jobs focused on developing renewable and alternative energy sources, making Schenectady the hub of GE’s burgeoning renewable energy work. Barack Obama, the former president of the United States visited the factory after the renovations had been completed in 2011. He encouraged the country to invest like this. “We want an economy that’s fueled by what we invent and what we build,” he said.

Four years later, GE Renewable Energy moved the headquarters to Paris. (GE claims it spent $39 million on the Schenectady Project and the more than 500 jobs that were created as a result of the project are still available at the Schenectady Plant today.

US President Barack Obama tours the Gene
ANDEL NGAN/AFP via Getty ImagesBarack Obama visits General Electric Plant in Schenectady with Jeffrey Immelt, GE chairman and CEO (L), January 21st 2011, Schenectady.

“GE’s reliance on government subsidies is an indisputable fact,” says Nick Juravich, a primary author on the report and the associate director of the Labor Resource Center at UMass Boston, “as is our government’s willingness to continue awarding subsidies to GE despite its rampant offshoring.”

‘It’s a multiplier industry’

GE’s off-shoring of manufacturing jobs is most clearly felt by U.S. workers themselves. “It’s been an ongoing joke since I’ve been there that GE will close in, like, five years,” says Bansfield, now an inspector at GE’s Lynn factory. The possibility that her job is outsourced or moved abroad now feels so imminent that she’s gone back to school, she says, “just to have a plan B.”

Kevin Smith, a former GE quality control worker in Salem, Virginia, says the problem is that communities themselves need a ‘plan B,’ too. Smith, along with many others, have been unable to find new employment in the same pay and benefits since GE closed the Salem facility, which had more than 200 employees. Smith says that this has had a ripple effect throughout the community from local holiday spending to charity drives.

It’s a similar story in Schenectady, where GE has reduced its workforce from nearly 30,000 unionized hourly production workers in 1970 to approximately 800 unionized hourly production workers now, according to the report. Christian Gonzalez, a 30-year-old castings processor in Schenectady plant’s gas turbine department, remembers a time between 2013 and 2016 when he and 40 to 50 of his colleagues would organize Friday lunches. “We would order out,” he says. “You’re talking hundreds of dollars on a weekly basis patronizing Schenectady small businesses.” Since then, Gonzalez’s team has roughly halved, he says, and they longer do the big group lunches.

Arthur Wheaton, the report’s other primary author and the director of Western NY Labor and Environmental Programs for the Worker Institute at Cornell, says those job losses have a “multiplier effect” on community. “A dollar doesn’t just go to the employees, it goes through the community to all sorts of restaurants, nonprofits, [and] other activities,” he says, and that has “a major impact when you’re cutting thousands and thousands of jobs.”

GE says it’s investing in domestic workforce training. Earlier this month, it announced a $4.4 million grant to extend an “advanced manufacturing training” program benefitting Lynn and the Massachusetts’ North Shore, and ​​in 2019, it invested $900,000 in an internal training program. GE, which employs nearly 2,450 Massachusetts residents, is one of Massachusetts’ largest manufacturing companies. The report also notes that GE continues to invest domestically in manufacturing, with more than $4.3B in the domestic Aviation Division and just $1.1 billion overseas since 2010.

But the researchers maintain that directing a fire hose of public funds at GE as it simultaneously winds down domestic manufacturing represents a lost opportunity—both for fighting climate change and supporting a healthier U.S. economy. It may also be the case in an era when both Congress and the White House are prioritizing investment in renewable energy.

“There’s a huge amount of growth here,” says Juravich, of the opportunities in the renewable energy market. “The question is whether it’s going to benefit American workers.”

GE’s announcement Tuesday that it will split up its businesses into three separate ones doesn’t change the researchers’ calculations. “Whether managed by one company or three, GE’s core industrial businesses rely on government contracts and subsidies and are inextricably intertwined with US industrial policy,” Juravich adds. “We hope that GE’s plan to ‘realize the full potential of each of [their] businesses’ will include re-investing in US workers and communities.”


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