Why GE locomotive talks derailed

LYNN – During the 19 days they spent trying to craft a plan to bring 350 locomotive assembly jobs to the River Works, General Electric executives and union negotiators were aware that Caterpillar Inc., a major GE competitor, was ready to pay workers $14 to $18 an hour to build the engines in Indiana.?They were worried about competition from that plant,” said International Union of Electrical Workers Local 201 Business Agent Ric Casilli.Out-of-state competition from businesses operating in parts of the country with lower costs of living and lower wages than Massachusetts is a constant challenge faced by businesses located in the state.State Housing and Economic Development spokeswoman Kimberly Haberlin said state officials have taken several steps recently to keep jobs in Massachusetts and attract new ones.Haberlin said the state?s corporate tax rate has dropped from 8.75 percent to 8.25 percent, marking the second year in a row the rate has declined. The Department of Revenue estimates that 35,000 Massachusetts-based businesses will benefit, with total tax relief of $411 million spread over fiscal years 2010, 2011 and 2012.State officials have worked to reduce the time it takes for small businesses to obtain state permits and found ways to provide small businesses with more capital for expansion projects, Haberlin said.Despite out of state competition, some Massachusetts industries, including insurance, are thriving, said New York Life financial services professional and Lynn Area Chamber of Commerce member Steven Shea. He said the firm?s Boston office plans to hire 100 more agents this year.?The services we provide our clients continue to be in high demand. The high cost of living has very little impact on New York Life?s ability to hire in this area,” he said.Casilli said state assistance for the locomotive deal was potentially available and said GE executives negotiating the gear plant reopening “were confident they were going to get help from the state” and said any state assistance could have potentially helped cover the estimated $35 million to $50 million cost of refurbishing the gear plant for locomotive work.GE spokesman Richard Gorham said talks with the state over possible assistance on the reopening the gear plant would have begun only after GE and IUE reached an agreement.Casilli said union negotiators “emphasized the support services infrastructure already in the plant,” including security, maintenance and firefighting departments, in trying to convince the company to bring locomotive jobs to Lynn. He said the company would have had “to start from scratch” to provide these services at a new plant in an out-of-state location.Gorham would not confirm the states GE considered as locomotive plant sites or confirm Casilli?s statement that Texas is one location. He said the site chosen by the company?s Transportation Division will pay hourly wages reflecting “market-competitive rates to what our chief rivals are offering.”River Works aviation workers earn on average $30 an hour but Casilli said the last union proposal submitted to the company addressed “competitive wages” and GE?s concerns about keeping the locomotive workers a separate union from 1,860 River Works union aviation workers.Talks fell apartment on April 13 after GE proposed tying a new and lower wage scale for future aviation hires to the locomotive job proposal.?Both sides tried to make it happen. In hindsight, could something else have been done?” Gorham asked.Moonsu Han teaches economics at North Shore Community College and he thinks the answer is yes.?We have to find a kind of harmony between labor and its employers. Knowing each other, talking more and understanding each other better is the only way. They can give up or both sides can come to an agreement,” said Han.