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GM to Hourlies Last Chance for Buyout Deals

February 12, 2009
General Motors expects the current round of hourly worker buyouts to be its last.

Workers who don’t take the deal face the prospect of future cuts without such a safety net.

“It’s unlikely we’ll have another attrition program,” said GM spokesman Tony Sapienza.

The automaker hopes the latest buyout program will yield enough savings that further programs wouldn’t be necessary. But the veiled threat is that future cuts in workers may not include incentives.

GM is using buyouts and retirement incentives to cut its workforce as the carmaker tries to prove its long-term viability to federal officials. GM and Chrysler have to present to the government business plans Tuesday, February 17, proving their viability as part of a $17.4 billion federal loan commitment to the companies.

The automakers are being told to bring their labor costs in line with the Japanese transplants. Bondholders, suppliers and dealers also are expected to make sacrifices.

First-quarter production cuts of more than 50 percent have added to the urgency of slashing employment at GM’s factories.

GM believes its prospects are good for a decent take rate on the buyouts, Sapienza said. Of the company’s 62,000 UAW-represented U.S. employees, about 22,000 are eligible to retire, he said.

To coax those workers to leave, GM is offering $20,000 cash and a $25,000 voucher for a GM vehicle. Another part of the incentive program allows workers 55 years and older with at least 10 years of service to retire with full retirement benefits.

Workers not eligible for retirement who take a buyout get $20,000 cash and a $25,000 vehicle voucher. They won’t receive retiree health care benefits, only their accrued pension.

GM sees no further buyouts on the horizon because reductions from the current program are likely to bring the workforce to a sustainable level once car sales return to more normal levels, Sapienza said.

At some point, the carmaker hopes to be able to hire so-called two-tier workers who will earn about half the $28 an hour paid to veteran workers. Those two-tier workers also will receive half the benefits of veteran workers.

GM’s current round of buyouts is less generous than those of last year. Retirees received their $45,000 all in cash last year. Those taking a buyout while relinquishing future retiree health care received $100,000 in cash. About 18,000 left under both programs in 2008.

This year, GM’s buyout offerings are more limited because of the company’s strained finances and the automaker’s inability under the federal loan agreement to use its pension fund to pay the incentives. GM paid its participants from the pension fund last year, Sapienza said.

Chrysler is offering a buyout program similar to GM’s, but with heftier incentives.

Retirement-eligible Chrysler workers who leave will receive a $50,000 incentive plus a voucher of $25,000 for a new Chrysler vehicle.

Chrysler workers not eligible for retirement who take a buyout get $75,000 and a $25,000 car voucher, and no retiree health care benefits.

The recently announced end of the Detroit 3 Jobs Bank also might prod workers to retire.

That safety net allowed idled workers to earn about 95 percent of pay and benefits after they had exhausted state unemployment and supplemental benefits.

Without the Jobs Bank, idled workers have just 48 weeks to collect unemployment and supplemental benefits that together bring pay to about 72 percent of regular take-home.

Filed by  David Barkholz of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com

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