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GM Offers Buyouts to 74K Hourly Workers

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GM Offers Buyouts to 74K Hourly Workers
February 12, 2008 9:38 AM ET
MSN Money; Sourced from Associated Press

DETROIT (AP) - General Motors Corp., eager to lower wages and staunch the kinds of losses it saw in 2007, said Tuesday it is offering a new round of buyouts to all 74,000 of its U.S. hourly workers who are represented by the United Auto Workers.

Workers will be given the details of the buyouts over the next several weeks. Most of those who accept are expected to leave by July 1, the company said. The UAW represents 98 percent of the company's U.S. hourly workers, with smaller unions representing the rest, GM spokesman Dan Flores said.

GM won't say how many workers it hopes to shed or how much it expects the buyouts to cost, but under its new contract with the UAW, it will be able to replace up to 16,000 workers doing non-assembly jobs with new employees who will be paid half the old wage of $28 per hour.

UAW President Ron Gettelfinger said he expects fewer than 20,000 workers to take the buyout. Gettelfinger said the union understood that more buyouts would be coming when it agreed to the contract.

"We didn't go into the contract blind. We're proud of our membership. There are certain things we cannot control," he said during an interview Tuesday morning with a local radio station.

Ford Motor Co. and Chrysler LLC already have announced similar buyout offers.

GM had been offering buyouts to about 5,200 UAW workers at service and parts operations and some closed plants since December, but those workers now are eligible for the new, sweetened offer, which raises the incentive payments for retirement-eligible workers by $10,000 for production workers and $27,500 for skilled workers.

Retirement-eligible workers will be offered $45,000 for production workers and $62,500 for skilled workers to retire with their full pension and health benefits. Those workers can take the money in a lump-sum payment or take it as monthly payments. They also can roll the money directly into a retirement account or 401k.

GM is giving less than Ford and Chrysler, which are offering up to $70,000 in lump-sum payments, but GM said its offer is comparable because workers who roll the money into a retirement account won't have to pay as much in taxes.

Workers who are within four years of their 30th anniversary with the company can opt to retire early and get reduced pay until their full retirement kicks in. Workers who are at least 50 with a decade of service can retire with reduced pension and health benefits. Workers also can opt to take up to $140,000 to leave the company with no ties, including pension or health benefits.

GM said it has 46,000 workers who qualify for the retirement or near-retirement options, including 21,500 workers who have 30 years of service. It's unclear how many of those will leave.

GM conducted a round of buyouts in 2006, when 34,410 workers left the company. The buyout programs are voluntary, and GM can't force any hourly workers to retire.

Ford announced last month it will offer buyouts to all of its 54,000 UAW-represented employees. Ford said workers will begin leaving the company in April.

Chrysler, which is trying to cut up to 21,000 of its 45,000 U.S. manufacturing jobs, is giving workers on temporary or indefinite layoff up to $100,000 to sever ties with the company. Chrysler said the date workers will leave varies by plant, but some could leave as early as April.

GM shares rose 13 cents to $27.25 at the open of trading Tuesday.

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