GM, Chrysler offer to buyout their hourly workers

February 5, 2009

GM follows a move by Chrysler to further cut labor costs

Detroit (ChattahBox) — Chrysler LLC and now General Motors Corp. are reportedly offering blue-collar employees buyouts and early retirement offers as the automakers try to cut their work forces and reduce expenses.

Chrysler made its offers last Friday to all hourly workers represented by the United Auto Workers except those at the company’s Kenosha, Wis., engine plant, according to a memo detailing the offers that was obtained by The Associated Press. The auto companies can leave the jobs vacant for now, then later fill the jobs as needed with new workers who can be paid about half what current employees make.

Chrysler’s roughly 26,800 production workers represented by the UAW make about $29 per hour, while GM’s 62,000 UAW-represented workers make around $28. Under a contract reached last year, the company can pay replacement workers around $14 per hour and give them less-costly health care and retirement benefits.

Chrysler’s early retirement package includes $50,000 cash and a $25,000 voucher to buy a car, while the buyouts include $75,000 cash and a $25,000 car voucher, according to the union memo. The buyout offer is more lucrative, with $115,000 plus a $25,000 car voucher for workers with 10 or more years of seniority at closed plants in St. Louis and Newark, Del., according to the memo.

The GM offer, which takes effect Friday, is less lucrative than the deal proposed by Chrysler, or even offers that GM has made to its hourly staff in the past. The automaker will give most of its 62,000 U.S. hourly workers $20,000, as well as a voucher good towards the purchase of a GM car worth $25,000.

In the past, GM offered between $45,000 to $62,500 to workers to retire early, and $140,000 to employees who left the company and agreed to give up post-retirement health care coverage. Those offers were all cash.

Workers at both companies have until Feb. 25 to accept the offers.

Both GM and Chrysler have seen sales decline with the overall U.S. auto market and have been forced to take government loans in order to survive. Chrysler received $4 billion and expects to get another $3 billion after it shows the government its plan to become viable Feb. 17. GM has received $9.4 billion and expects to get $4 billion more when it files its plan. The conditions require the Chrysler and GM to make changes to their UAW contracts, including elimination of the jobs bank, in which workers get most of their pay even when they are laid off. Chrysler, GM and the union said last month that the jobs banks had been eliminated.

Ford Motor Co., which says it has enough borrowed cash to make it through 2009 says it has “no plans at this time to offer buyouts to hourly workers.” The Dearborn-based automaker offered 10 early retirement and buyout packages to all hourly workers during the first quarter of 2008 and offered packages at selected factories in the third quarter. About 7,100 employees left the company as a result.


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