General Electric Transportation is planning to end most of its locomotive manufacturing operations at their 100-year-old plant in Erie, Pennsylvania which will result in the loss of approximately 575 jobs. GE’s workforce totals about 2,000 people performing mostly non-manufacturing duties. Of course, if the company decides to cut-back on management, the cuts could run deeper. Manufacturing for international customers will be shifted to Fort Worth, Texas, where approximately 225 workers may be recalled after a previous layoff at the Texas plant.
One of the dangers posed by Wall Street are activist investors who, like the legendary character Gordon Gecko, see their duty as maximizing shareholder value at any cost. And, all too often, executives fearful for their jobs have little choice other than to resign or implement dramatic cost savings measures which usually is a code phrase for moving to a more tax friendly environment and shedding personnel.
According to Bloomberg News, “The Boston-based manufacturer agreed earlier this year to deeper cost cuts through 2018 following discussions with shareholder Trian Fund Management, the firm co-founded by [activist investor] Nelson Peltz.
Nelson Peltz's investment firm Trian Partners has disclosed a new stake in General Electric (GE). Trian now apparently owns 98.5 million shares of GE worth around $2.5 billion.
Of the stake, Peltz said that "We invested in GE because it is undervalued and underappreciated by the market despite what we believe is a transformation that will allow its world-class industrial businesses to drive attractive shareowner returns. Our recent discussions with Jeff and his team have solidified our belief that they are highly motivated to fully deliver on GE's transformation and share much common ground with Trian on ways to improve long-term shareowner value." For those wishing to read Trian’s whitepaper on GE, it can be found here.
Jamie Miller, the chief executive officer of GE Transportation, was quoted as saying, “We’ve been operating in a challenged North American locomotive market.” Of course, he was quick to add, “This action is taken so we can be as competitive as we can be.”
Watch a Katie Couric interview with an employee and a union representative from the Erie GE Locomotive facility and how jobs were transferred from unionized Pennsylvania to a non-union Texas facility to capture tax incentives. It's one side of the story and openly acknowledges that jobs have been lost to technology and unionization. Couric was even-handed as she asked the union rep straight out if the union is responsible for the loss of jobs.
It pays for employees of large public companies to keep their eyes on company information that is freely available through the SEC’s EDGAR (Electronic Data Gathering, Analysis, and Retrieval ) site.
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