Sunday October 21, 2012

PITTSFIELD

Jack Welch’s false accusation that President Obama’s administration rigged the last reported unemployment rate drop from 8 to 7.8 percent must have been caused by his panic over the possibility that this could be the edge Obama needs for reelection. Why? Because Welch apparently considers Obama a serious threat to his idea of doing corporate business.

Welch, according to Thomas O’Boyle, in his book "At Any Cost; Jack Welch, General Electric, and the pursuit of Profit," documented how Welch was at the cutting edge of a major business change in the 1980s of discarding post World War II corporate paternalism in favor of downsizing, layoffs and plant closings. When he was in charge of General Electric, there was a loss of nearly 100,000 jobs. He was dubbed "Neutron Jack" for this after the nuclear bomb that exterminated humans while leaving empty buildings intact.

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When GE’s downsizing began in my city of Pittsfield, I was one of the concerned elected officials who tried to find out what was going on. GE officials offered little information. We were led to believe that the layoffs and plant closings were necessary for the company to stay competitive in the new global economy.

As a Pittsfield state representative I asked the state’s economic secretary to contact Welch to persuade him to keep a GE presence in the city. The state official told me that he was informed that Welch never again wanted a GE presence in a community like Pittsfield where it was the main economic influence. Later, at a local Chamber of Commerce breakfast, I was asked by a local reporter whether I had received any direct reply from Welch or any company official about the company remaining in Pittsfield. I had not. But one of the company’s officials stood up to say that he took it upon himself to tell Welch that Pittsfield was not a good place for GE to do business.

Later, I was contacted by this newspaper to review O’Boyle’s book. Two individuals, one a former GE employee and the other a former employee of the newspaper who had written laudatory articles about Welch, had declined to do this review. I reviewed the book and found the answer for what was going on at GE.

Under Welch’s management, layoffs and plant closings, formerly the last options of businesses in trouble, became fashionable first options in the pursuit of higher profits. Welch, according to O’Boyle, created a work place of purposeful job insecurity. To him the profit outcome mattered more than people. GE managers had to hit a home run almost every time and be number one in profits or they were out.

Still later, I was able to talk with O’Boyle on a radio call-in show on WAMC about his book. I asked him whether he thought that GE could have remained in Pittsfield and stayed competitive in consumer electronic and plastic products. He said the company certainly could have done so, but the profits would not have been high enough for Welch’s quest to be number one in profits and in the stock market. He made the point that GE was a big, profitable company and was not in financial trouble at the time.

At the time my book review appeared in this newspaper, Roger Lowenstein, who has been described as a prominent financial journalist and author, wrote a review of O’Boyle’s book. Lowen stein wrote that O’Boyle was wrong about what happened at GE. He then stated that America has reaped a huge dividend from GE’s layoffs and plant closings by the goods and services that GE’s former workers will contribute in other lines of work. Lowenstein was wrong. Pittsfield and Berkshire County have still not recovered from the devastating economic blow they suffered by GE’s plant closings. Other communities, not only those where GE was formerly located, suffered equally because Welch’s corporate practice became the standard for business in this country.

Reportedly corporate profits in America today have hit an all-time high. One reason is that they employ fewer people. Another reason is that those employed are being paid less as a share of the GDP. There is also a move by Republican dominated state legislatures to take away collective bargaining rights from employees and destroy labor unions to subject employees to the whims of their employers in seeking even higher profits.

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Welch, as well as many of his like-minded corporate-profit-driven above all else business owners and managers, recognize that Mitt Romney, based on his business background, as president would carry on with this philosophy. Romney reinforces this by the signals he sends them with his campaign rhetoric. For example, in the wake of the failure to remove Governor Scott Walker in Wisconsin because of his policy of union busting by banning collective bargaining and laying off public employees, Romney posed the rhetorical question of why the people did not get the message for less teachers, firefighters and other public employees.

In his last television debate with the president, Romney spoke of an economy that would attract business from all over the world. China is doing that now with cheap labor, minimum business regulation and the like. Welch, unlike many of these business colleagues who hide their fear behind corporate free speech in the guise of secret donations that Obama might actually do something about their good thing of record profits at the expense of workers, has seemingly gone around the bend.

Robert "Frank" Jakubowicz, a Pittsfield lawyer, Is a regular Eagle contributor.