General Electric plans to outsource work being done by 217 employees at an Appliance Park distribution center to improve quality and reduce costs.
The 47-acre warehouse handles finished appliances — made locally, elsewhere in the U.S. and internationally — before they are shipped to customers including retailers or to other distribution centers closer to customers.
GE said it expects affected employees, including about 200 union members still under contract, to be moved to other facilities at Appliance Park.
The distribution center, called AP10, is one of eight such facilities GE runs throughout the country, and the only one not managed by a third party, the company said.
GE spokeswoman Kim Freeman told IL that although GE has invested $5 million into the center since 2013, its performance lags behind the other facilities — even though running it costs more.
Freeman said the union, the IUE-CWA Local 83761, has 60 days to offer a counter proposal to address some of the company’s concerns about the distribution center. Company management can approve the counter proposal, in which case the outsourcing may be averted, or it can reject the proposal and proceed with the outsourcing.
Dana Crittenden, president of the union, could not be reached Thursday morning.
Freeman said a union counter proposal would have to address the distribution center’s inefficiency and cost.
The facility has missed deadlines and disappointed customers, she said, which could result in customers switching to competitors.
“That is a critical concern,” Freeman said.
Moving appliances in AP10 also costs 30 percent more than in any of GE’s other warehouses, she said. Meanwhile, the center’s performance, based on metrics including the number of appliances that are damaged in the distribution operations, is worse than at other warehouses. And despite investment in modern technology and machinery, the center’s year-over-year performance continues to deteriorate.
“We’re just trending in the wrong direction,” Freeman said.
She expects that in about six months, a third-party distribution company will take over the warehouse in Appliance Park. The affected GE employees would be moved to other facilities within the park, and would retain their seniority and benefits.
GE’s appliance division employs about 6,000 in Louisville, where it is headquartered.
In the last few years, the company has made significant investments in the local campus and hired thousands, in part to focus on reshoring, or bringing overseas production back to the U.S. For example, late last year, GE said it would create 100 local jobs by reshoring production of air conditioners for the hospitality industry.
GE in January agreed to sell the appliance unit to China-based Qingdao Haier Co. for $5.4 billion. The corporate parent has been trying to sell the unit for years because it wants to focus more on its industrial businesses, which generate higher margins. Company officials expect to complete the deal this summer. Federal antitrust regulators have given their approval. The companies have not made any announcement regarding a review by the Committee on Foreign Investment.