With a tentative labor deal being voted upon by workers, General Motors Corp. and the United Auto Workers are considering their next big move: a buyout package that could be offered to tens of thousands of employees.
GM and the UAW are separately considering options for offering early-retirement and buyout packages to higher-wage workers and replacing them with newer ones at lower pay levels, according to people familiar with the matter. Buyouts are important under the tentative agreement because they could allow GM to have as much as one-third of its UAW work force under what is known as a second-tier wage-and-benefit plan that pays about half the traditional UAW-GM compensation package.
• Contemplating Retirement: GM and the UAW will soon begin crafting buyout packages that could be offered to at least 18,000 workers eligible for retirement.
• What’s In It for GM: The auto maker’s tentative new labor deal allows it to replace departing workers with new hires with smaller overall pay packages, helping to reduce costs.
• What’s In It for the Union: Buyout packages could help ensure passage of the new labor deal by rank-and-file members, and it can open slots for part-time workers to become full-time.
GM, which employs about 74,000 UAW members, hopes the two-tier system will help it close the cost gap with Asian rivals such as Toyota Motor Corp.
For the UAW, a buyout of some of GM’s work force would help open up about 3,100 jobs for workers now in temporary positions. It also would help turn 3,000 outsourced jobs into union jobs.
UAW leadership, which is explaining its tentative agreement to members across the country, is using the likelihood of another buyout package as an enticement to older workers, many of whom would like to retire but are awaiting some sort of exit package.
Last week, United Auto Workers President Ron Gettelfinger said details of an attrition program would be worked out later, but he didn’t give details.
Final details of an attrition plan, including whether it would be offered to workers eligible for retirement or more broadly, are to be determined, several people mulling the options said. The issue was discussed during bargaining, with both sides agreeing to do such a deal, likely in the first quarter of 2008, these people said.
GM estimates it has about 18,000 workers who have been with the company 30 or more years and are eligible for retirement. About half of its UAW members will be eligible to retire by 2012. As GM hires replacements for these workers, it will continue to have three years during which those new hires take home lower wages than so-called legacy workers. The level of benefits the new workers get is also significantly reduced.
Buyouts or early-retirement offers are likely to be similar to those offered by GM in March 2006, when the company offered its then-113,000-member hourly work force packages ranging from $35,000 to $140,000, people familiar with the negotiations said. The offers went out to every GM-UAW member.
Another detail that will be debated this time is whether buyouts are companywide, which is the UAW’s preference, or targeted at certain plants and certain jobs, which GM prefers.
“I think we’ll see a lot of movement in that area,” said Doug Radamacher, president of Local 602 in Lansing, Mich. He noted GM reserves the right to employ targeted buyout programs at select sites, such as it did at a neighboring plant in Lansing over the summer.
If there is concern that not enough people would take buyouts, GM could modify their packages, said a person familiar with the UAW talks. The company could offer more money than it did last time or add wrinkles, such as an education plan that offers to pay workers some of their normal wages while also paying for school.
About 35,000 GM workers accepted the package in 2006, a key element in GM’s ability to reduce its UAW head count by 35% since the offering. GM was especially pleased with the result because a greater number of people took buyouts than expected, allowing the auto maker to effectively cut ties with workers in exchange for lump-sum payouts.
Ford Motor Co. and Chrysler LLC, which have yet to agree on new contracts with the UAW, would also want to push early-retirement and buyout offers for their UAW members. Like GM, both cleared out thousands of workers in the past year via buyout plans.
Those auto makers have been in a holding pattern, waiting to restart contract talks, due to the UAW’s need to focus on contract ratification efforts at GM. The UAW has seen the contract ratified at most of the GM plants that have voted thus far; most locations have yet to hold votes. It is estimated the contract is passing with about 68% approval.
Once the UAW begins talks with one or both of those auto makers, it could face considerable hurdles in forging a deal similar to the one pending with GM, as both Ford and Chrysler have different demands from the union.
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Tags: GM, UAW, General Motors Corp, automakers, early buyout, United Auto Workers
Categories: Ford Motor Company, GM
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