General Electric to Gut 575 Jobs at Locomotive Plant in Erie, PA

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Under pressure to cut costs, General Electric Company (NYSE:GE) is looking to end production at it locomotive parts plant in Erie, Pennsylvania, a move that will result in the loss of 575 jobs. The century-old factory is a casualty of the sharp downturn in the domestic rail market.

GE maintains it is still committed to the plant and will simply move production for international customers to a lower-cost facility in Fort Worth, Texas. The job cuts represent about 20% of the more than 2,500 people employed at the Northwest Pennsylvania plant.

GE will begin talks with Local 506 of the United Electrical, Radio & Machine Workers of America, the union that represents the workers, within the next 60 days.
GE has been gradually moving work to Fort Worth, where the workers are not represented by a union.

About 2,000 workers will remain at the Erie plant, which is still the largest GE Transportation site. While some manufacturing will stay, the facility will focus its efforts on design, engineering, and prototypes.


The company is cutting costs across GE as it looks to strengthen operations after several quarters of underwhelming results and a slumping stock price. The cost-cutting moves were also expedited after the company spoke with activist shareholder Trian Fund Management, a firm co-founded by Nelson Peltz.

In 2016, GE’s share price advanced six percent, while the S&P 500 was up 10.5%. In the first seven months of 2017, GE’s share price has tumbled more than 17%; the S&P 500, on the other hand, is up 10%.

Over the last two years, GE’s share price has plunged nearly 12%. Meanwhile, the S&P 500 has advanced 21.5%.

The GE Transportation division has been hammered by a 10% decline over the last couple of years in North American freight railcar loads. Thanks to weak oil prices and dwindling coal production, thousands of locomotives are sitting idle. Revenue in the Transportation division tumbled 21% in 2016 to $4.71 billion, and has continued to slide in 2017.

One bright spot, though, has been international demand. GE is working on a 1,000-locomotive order from India and has recently signed agreements with Egypt and Pakistan.


GE to Cut 575 Jobs at Century-Old Locomotive Plant,” Bloomberg, July 27, 2017.

2016 Annual Report,” General Electric Company, January 20, 2017.