GM, UAW talk buyouts for 20,000
Massive downsizing plan would impact idled GM workers, help Delphi recover from bankruptcy.
Bill Vlasic and Brett Clanton / The Detroit News
Buyouts through the years
A look at retirement and separation offers from Detroit automakers:
Under a longtime agreement with the UAW, factory workers at GM, Ford Motor Co. and the Chrysler Group with 30 or more years of service can retire with full benefits.
When Chrysler sold a New Castle, Ind., parts plant to Metaldyne in 2004, workers had several choices: Stay on as Metaldyne employees at $16 an hour, enter Chrysler's Indiana jobs bank, enter Chrysler's national jobs bank, or accept a buyout and leave the company. Under the buyout, Chrysler paid $75,000 to $100,000 to each worker, depending on years of service and other factors.
Ford is offering buyouts of $100,000 to workers in Lorain, Ohio, and Edison, N.J., who lose their jobs to plant closings if they agree to give up all benefits except pensions. Aside from the $100,000 buyout, offers include a tuition reimbursement program, two early retirement programs and a preretirement leave program for those just short of the 30 years needed to retire.
In the early 1990s, GM offered early retirement and separation programs to workers idled as a result of plant closings and production cutbacks in Van Nuys, Calif.; North Tarrytown, N.Y.; Wilmington, Del.; and Ypsilanti. One option allowed retirees to collect a full pension and still work full time at another job without having their GM benefits reduced. GM also gave those retirees a $10,000 voucher toward the purchase of a new GM vehicle and up to $4,000 for taxes and registration fees. Workers who agreed not to earn more than $15,500 a year at another job were offered a $15,000 voucher toward a new car, plus $6,000 for taxes and license fees. Workers who did not qualify for retirement were offered up to $100,000 to leave GM voluntarily.
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General Motors Corp. and the United Auto Workers are in advanced talks on buyout offers for up to 20,000 hourly employees, setting the stage for the biggest exodus of union workers in recent memory.
The massive buyout plan would clear the way for GM to absorb the "flowback" of thousands of idled UAW workers in the automaker's "jobs bank" as well as former GM employees on the payroll of bankrupt Delphi Corp.
The negotiations on buyouts are integral to GM's planned downsizing of its U.S. manufacturing operations and the emergence of Delphi, its largest supplier, from bankruptcy, according to people familiar with the matter.
Talks shifted into a higher gear last week as GM identified an estimated 37,000 workers -- virtually an entire generation of UAW workers -- in its vast network of plants that are eligible for retirement.
Details of the daily negotiations between GM, the UAW and Delphi have been closely guarded, with none of the sides willing to publicly discuss the number of buyouts on the table or the financial breakdown of possible buyout packages.
But GM Chairman Rick Wagoner has repeatedly said that "accelerated attrition" of older workers is a top priority as GM seeks to shed 30,000 factory jobs by 2008 and become profitable again.
"This could be the biggest buyout in memory and a turning point in the history of the industry," said Harley Shaiken, an international labor specialist at the University of California-Berkeley.
The UAW has told leaders of its GM locals to be prepared to meet next month in Las Vegas to possibly review details of buyout offers to be presented to rank-and-file workers.
Workers ready to retire
Moreover, UAW local officials across the country say scores of retirement-eligible workers are keenly interested in accepting financial packages to leave the struggling automaker.
"I've got 1,000 ready to go," said Chris Sherwood, president of UAW Local 652, representing workers at GM's Lansing Grand River plant. "If they're a senior ready to retire, they'd be foolish not to take it."
The buyout negotiations are a critical part of an evolving plan to reorganize troubled Delphi, the auto parts giant formerly owned by GM that filed for Chapter 11 bankruptcy in October.
Delphi employs 24,000 UAW members who previously worked for GM. With Delphi Chairman Robert S. "Steve" Miller threatening huge wage cuts for hourly workers, the UAW is pushing GM to make space for Delphi workers to "flow back" to GM jobs vacated by retirees.
GM also is anxious to reduce the swelling ranks of its jobs bank, either through buyouts or by recalling idled workers.
The GM jobs bank contains about 8,000 workers who are paid full wages and benefits even though their jobs have been eliminated. Last month, the entire hourly work force of GM's Oklahoma City assembly plant -- 2,200 people -- was parked into the jobs bank when the factory ceased production indefinitely.
According to people close to the matter, GM and the UAW are discussing whether to first launch buyout programs targeted at specific plants, or to offer buyouts companywide.
Whether similar offers will be made to retirement-eligible workers at Delphi is also being discussed. Sources close to the situation say Delphi workers appear likely to be included in the buyout program.
With the average GM hourly worker costing the company $130,000 a year, one-time buyouts could reduce the automaker's personnel costs substantially.
GM lost $8.6 billion last year amid a steady decline of its share of the U.S. new-vehicle market. In November, Wagoner unveiled a sweeping restructuring plan to cut 30,000 hourly jobs in North America by 2008.
"The average costs of an active employee is $130,000 a year, and the average cost for a retiree before Medicare is about $50,000," said David Cole, head of the Center for Automotive Research in Ann Arbor. "The savings are enormous."
GM plans to reduce its annual manufacturing capacity by 1 million vehicles by closing or downsizing six assembly plants and related facilities. The first to go down was Oklahoma City, where production of midsize SUVs ground to a halt in mid-February.
With no new product on the horizon, Oklahoma City workers are eager for a possible buyout and the opportunity to move on to life after GM.
"A lot of people here would take a buyout," said LaDonna Mandelkow, who worked on the assembly line in Oklahoma City for 27 years. "I definitely would go."
That sentiment is echoed at many other GM plants.
"If they offer it, a lot of people are going to run out of here," said Jim Kaster, head of UAW Local 1714 in Lordstown, Ohio, where an estimated 800 workers are eligible to retire.
Settling the Delphi situation
GM already has a contractual obligation to fund pensions for its former workers at Delphi, and pays higher prices for Delphi parts to subsidize the wages and benefits of its hourly workers.
In the fourth quarter of 2005, GM took a $3.6 billion charge against earnings to fund pensions for Delphi workers as part of its corporate spin-off of the parts maker in 1999.
With Delphi's bankruptcy case headed toward a potential showdown in court on wages for hourly workers, GM desperately wants to avoid a strike at its largest parts manufacturer. An extended walkout at Delphi could cripple GM product launches and trigger a cash crisis at the automaker.
"The notion of a buyout as large as 20,000 workers would go a long way toward settling the Delphi situation," said Shaiken, who has studied the UAW for more than 20 years. The drastic downsizing of GM's work force is a blow that would be softened by financially attractive buyouts.
"In previous tough times, the union wanted to preserve jobs for the future," he said. "But these are not just tough times. There are major structural shifts going on, and what the UAW is seeing with buyouts is the best of the available options."
The faster they do this the better. I still won't buy an American car or truck but maybe those "skilled" workers can use their new sense of urgency to make other American industries more competitive. American's know how to compete and should be allowed to,; they just need some incentive at times.
Wow, do a bad job and get a $100,000 bonus! Now that's anti-capitalism at work.z
Must be nice to get paid to get downsized
Here in Reality Land, we just get a "Sorry we had to let you go. You understand, right?" $100K to go along with that would make losing your job a lot less stressful.