GM offers all U.S. union workers buyouts, retirement
DETROIT (Reuters) -- General Motors will offer buyouts or early
retirements to all 74,000 U.S. hourly workers represented by the UAW in
a sweeping deal with the union intended to clear the way for GM to hire
The cost-saving agreement follows on a program launched in January for
about 5,200 workers at GM's service parts and operations facilities
across the United States and five other facilities, and comes with
better terms than GM offered to UAW workers in 2006.
Separately, GM said this morning that it posted an adjusted net loss of
$23 million in 2007 compared with an adjusted net gain of $2.2 billion
in 2006. But, as previously announced, GM took a massive $38.7 billion
charge for how it calculated certain tax assets. As a result, GM's net
loss was an all-time record $38.7 billion.
GM's core automotive unit posted an adjusted $553 million gain for the
year compared with an adjusted $339 million loss in 2006.
"GM's worldwide vehicle sales increased 3 percent, or 277,000 units, to
9.4 million vehicles in 2007, marking the second best year in units sold
in the company's 100-year history," the company said in a statement.
"For the third consecutive year, a majority of the company's sales --
almost 60 percent -- were outside of the U.S."
Meanwhile, GM representatives said it would take weeks to roll out the
complicated buyout offers to its workers, who will have 45 days to
consider them and then seven days to reconsider. It expects to complete
the voluntary program by July 1.
GM's agreement with the UAW follows similar deals the union reached with
Ford Motor Co. and Chrysler LLC following the 2007 contracts that allow
U.S. car makers to hire many workers at lower wages and benefits, while
guaranteeing some jobs.
New hires wanted
GM executives have said the automaker will take advantage of a
ground-breaking contract provision that will allow the automaker to hire
workers at second-tier wages, but they have declined to say how many of
the current workers who take the offers will be replaced.
GM said it would offer better terms and more choices for its
already-retirement-eligible UAW workers, including increasing payouts to
$45,000 for production workers and $62,500 for skilled trades workers.
The automaker had offered $35,000 cash across the board in 2006 for its
retirement-eligible workers, but Ford and Chrysler recently increased
their retirement incentives for hourly workers and the U.S. economy has
weakened since 2006.
Workers may choose a lump-sum payment, an annuity, or roll part or all
of it into an individual retirement account or a 401K to postpone the
tax hit and potentially make the offer worth much more than those on
offer for UAW workers at Ford.
GM factory workers who retire after 30 years currently have pensions of
about $3,100 per month, plus health benefits.
The company also has lowered the eligibility for an enhanced retirement
program for workers with 26 years experience who will be allowed to take
what amounts to a reduced pension for four years before entering full
GM workers who are over 50 with at least 10 years experience may retire
with reduced pensions, plus benefits.
UAW workers with more than 10 years experience also could opt for a
$140,000 lump-sum buyout to leave with only their accrued pensions, or
$70,000 if they have less than 10 years.
No targets revealed
GM does not plan to release a target for the number of workers it
expects to participate. It plans to release a final figure when the
program is completed, possibly in July, representatives said.
The deals for GM's workers differ from Ford's and Chrysler's in part
because of the differing ages of the work forces and company objectives.
More than 34,000 workers left GM after accepting buyout packages that
ranged from $35,000 to as much as $140,000 in 2006.
The buyout offers from the U.S.-based automakers come amid concerns
about the strength of the U.S. economy and the possibility that U.S.
industry light vehicle sales could slump more in 2008, after a drop in 2007.
Top executives of GM, Ford and Chrysler all have said in recent weeks
that they would take further restructuring actions if necessary because
of economic conditions.
All three automakers reached agreements with the UAW that would allow
them to hire new workers for some jobs starting at $14 per hour, or
about half the current average hourly wage.
U.S. automakers have been cutting capacity to match their declines in
market share and their new UAW contracts allow them to shift their union
retiree health-care obligations to union-controlled trusts.