GM, Chrysler Look to Cut Workforce
Auto Giants to Offer Incentives for U.S. Employees to Give Up Jobs
Tuesday, February 3, 2009; Page D03
Nearing a deadline to present viability plans to the Treasury Department, General Motors and Chrysler plan to offer a new round of incentives to encourage U.S. workers to give up their jobs in order to shrink labor costs, according to people familiar with the matter.
The two automakers, buoyed by $13.4 billion in federal loans, have begun discussing plans with the United Auto Workers union to cut their blue-collar workforce as they try to weather a sharp slide in sales. GM and Chrysler must submit viability plans, demonstrating significant cuts and labor concessions, to Congress by Feb. 17.
Both companies and others are in Washington this week presenting new cars and trucks at the capital's auto show. The small annual show has taken on national implications, as carmakers lobby for additional aid and attempt to show lawmakers that the money would not be spent in vain.
The new round of buyouts signals yet another blow to union workers. Last month GM, Ford and Chrysler all won agreements from the UAW to end so-called jobs banks, programs that continued to pay union employees at idle plants.
Those familiar with the latest buyout plans spoke anonymously because the details have not yet been made public. A UAW spokesman did not return phone calls seeking comment.
At Chrysler plants, retirement-eligible workers would receive $50,000 plus a $25,000 car voucher to give up their jobs. Workers that leave without taking retiree health-care benefits would get $75,000 and a $25,000 car voucher. The money for these lump-sum incentives would be drawn from corporate funds, budgeted in 2008, and not from the pension fund or Chrysler's government loan.
Last year, depending on workers' length of tenure, the early retirement packages ranged from $70,000 to $100,000. The overall value of this year's package is essentially the same with the car voucher, said a person familiar with the matter.
"Given the difficult economic and market conditions in the U.S., Chrysler LLC determined in December 2008 that it would offer another phase of Special Programs," Chrysler spokeswoman Mary Beth Halprin said in an e-mail, without addressing details of the plan.
The programs were initially slated to begin in December. Because many Chrysler plants extended holiday production suspensions into January, the programs are being rolled out now, Halprin said. Workers will need to make a decision between yesterday and Feb. 25, she said.
GM's package is less generous. Both retirees and those who take the buyout would receive $20,000 in cash and a $25,000 car voucher. GM plans to present the package to workers today, according to a person familiar with the matter who spoke anonymously because the details were not yet public.
In one round of buyouts last year, GM employees eligible for or nearing retirement were offered as much as $62,500 to retire early. Those who are not eligible received $70,000 to $140,000 depending on their tenure.
GM spokesman Tony Sapienza declined to comment.
Meanwhile, GM is also lobbying for stimulus relief to aid its restructuring efforts. Though GM plans to offer equity in exchange for debt and relief from health-care obligations to union workers to cut costs, those actions may create a tax liability of as much as $7 billion unless Congress intervenes. The discussions were reported earlier by the Detroit News.