The beginning of summer this year will kick off a double dose of activity on Schenectady’s General Electric campus with the expected nine-week plant shutdown and the start of the new battery plant construction.
The furlough for an estimated 800 to 850 workers is part of the accepted contract changes union GE-IUE Local 301 negotiated with GE almost a year ago. As part of the agreement, workers will receive 75 percent of their pay during the shutdown.
Officials say the contract avoided the potential loss of permanent hourly jobs through June 2011 and paved the way for construction of the $100 million battery plant also expected to start this summer.
“We’re a long-cycle business, and this extended shutdown is a response to the low volume that we’re seeing in our plant over the summer as result of the challenging economic environment we saw in late 2008 and 2009,” said GE spokeswoman Chris Horne. The typical summer shutdown for GE in Schenectady is two weeks, she added.
There will still be approximately 160 to 170 facilities and maintenance workers present on the campus.
“Our facilities and maintenance operation will work during that time. We’ll take advantage of the fact that the plant is shut down to do some major capital upgrades and projects,” Horne said.
City and county officials said Friday not to expect “doom and gloom” since the net economic impact of the shut down is mitigated by GE’s investment in a new battery plant.
Susan Savage, chairwoman of the Schenectady County Legislature, said while other parts of the country are experiencing permanent layoffs, she is grateful that GE and union leaders here were able to work out an “innovative arrangement” that provides employees with 75 percent of their pay without any layoffs.
“GE continues to invest in Schenectady County, including expansions at the Global Research Center in Niskayuna, the new Global Renewable Energy Headquarters with 650 jobs and the new $100 million battery plant that will start construction this year,” Savage said in an e-mail. “Over 2,300 construction workers were involved in building the Renewable Energy project. As the battery plant begins construction, Schenectady County will benefit from a positive impact from the new construction activity.”
GE will begin consolidating manufacturing operations from two buildings into one, according to Horne.
Schenectady Mayor Brian Stratton called the shutdown “part of the ebb and flow in a difficult economy and a competitive international marketplace.”
“They could have gone anywhere in the country and this was part of the deal. In exchange, we got a brand new division here, and they received something that is unprecedented in manufacturing history with a no-layoff clause,” Stratton said.
Stratton said the city is leading the way in green technology, referring to last week’s announcement that the region tops a list of 43 metro areas for its green jobs per capita.
The “Green Jobs Index” was put together by the Business Courier of Cincinnati, a business publication that referred to environmental factors like the number of LEED-certified projects, green jobs, transit use, water quality and other variables when putting together the list.
City Historian Don Rittner said GE’s influence on the city continues to carry a significant impact.
“If you look at it historically, when GE had 40,000 working there, people walked home when the whistle sounded. That’s when the city was really buzzing,” Rittner said. “Even though they don’t have the same presence they had 50 years ago, 800 people is still a substantial amount of people out of the mix. Someone’s going to feel that.”
Whether it is gas stations, restaurants or local dry cleaners, Rittner said there could “lots of mini impacts,” related to the shutdown.
“The way the economy is, small businesses rely on every customer they can get,” Rittner said.
As the city’s downtown economy continues to diversify with commercial, residential and retail growth in the next five years related to Schenectady County Community College and the redevelopment of lower State Street and Erie Boulevard, the city is suited to benefit from more demand that cuts the effect of a larger company like GE furloughing employees, according to Rittner.
“The impact of a company like GE furloughing for two weeks won’t have such a deep impact then,” Rittner said.
As furloughs become more common within global labor management strategy as employers seek to align operating costs with declines in sales because of recessionary forces, experts say it’s important for workers to plan and be prepared.
Ron Plaine, certified financial planner and owner of RLP Financial Management in Schenectady, said a GE worker’s decline in income could be offset by savings, seeking out part-time work, cashing in certain investments or seeking out a loan.
“None of them are really great options, but it’s better than being totally laid off,” Plaine said. “It pays to plan for an emergency and have a little bit on hand.”
Plaine said even non-GE workers should also take note of local furloughs, since next time it could be their job that’s subject to a forced vacation.
In the time workers have to prepare for the furlough, Plaine said they should examine what their needs are, what funding sources are available and how they can access what they need by the time they need it.
“I would probably want to address it sooner rather than later,” Plaine said. “If you have some advance notice, you can put yourself in a position, where you can best survive the period you’re going to be out of work.”
But Plaine said it’s human nature to procrastinate.
“Some people are better at planning and preparing and some do not,” Plaine said. “Some people do save for a rainy day and have some investments and they can fall back on those during a tough time.”