GM Enhances Buyout Offers to 74000 Union Workers (Update4)
GM Enhances Buyout Offers to 74,000 Union Workers (Update4)
By Greg Bensinger and Jeff Green
Feb. 12 (Bloomberg) — General Motors Corp. is increasing
buyout offers for its most senior U.S. workers to as much as
$62,500, encouraging more of its 74,000 union employees to leave
and make way for replacements who can be paid half as much.
The automaker will offer payments of $45,000 to assembly-
line workers with 30 years or more at the company. Employees with
a skilled-trade designation such as electricians will get the
higher payments if they agree to leave, GM said in a statement
today. The new payouts exceed the $35,000 offered previously to
retirement-eligible members of the United Auto Workers union.
The buyouts are part of Chief Executive Officer Rick
Wagoner;s plan to cut U.S. labor costs in half and trim
$5 billion more from expenses by 2011. The effort will add to
$9 billion in annualized savings achieved since 2005. Detroit-
based GM hasn;t had an annual profit in three years.
“As GM realizes the full impact of its groundbreaking
contract with the UAW, including another sweeping round of
buyouts, the company;s turnaround should stay on track,;; David
Kudla, chief executive of Mainstay Capital Management LLC in
Grand Blanc, Michigan, said in a note to investors.
About 21,500 UAW members at GM are eligible for full
retirement now and another 25,000 are eligible for other
retirement options, GM said last month.
Retirees can take payouts in lump sums, as an annuity or as
a contribution to a 401(k) or individual-retirement account, GM
said. They can also combine a cash payment with the fund option.
Second-Half Savings
Most employees accepting buyouts will leave by July, “so I
think we;d expect to see the savings in the second half of the
year,;; Wagoner said in an interview on Bloomberg Television.
GM fell 52 cents to $26.60 at 4:01 p.m. in New York Stock
Exchange composite trading. The automaker today also reported a
fourth-quarter net loss of $722 million on a mounting deficit in
North America. Excluding some costs and gains that GM considers
one-time, the results beat analysts; average estimate.
GM reached a four-year agreement with the UAW last year that
lets it pay new workers about $14 an hour, about half the wage of
current unionized employees, while reducing health-care and
retirement benefits.
The automaker will tap its pension-fund surplus to finance
the buyouts for employees with at least 30 years; service, Chief
Financial Officer Fritz Henderson told reporters today in
Detroit. The U.S. pension was overfunded by $20 billion,
including about $11.5 billion to $12 billion for hourly workers,
at the end of 2007, he said.
Workers age 50 or older with at least 10 years at GM will be
allowed to retire early, while employees with at least 26 years
and fewer than 30 can opt to quit and receive lump-sum payments
until they reach 30 years. Any worker with at least 10 years at
GM can accept a $140,000 buyout to leave with no additional
benefits. Workers with less seniority can take $70,000.
UAW members who agreed to participate in a buyout offer
announced in December will be eligible to receive the higher
payments from the new program, GM said.
To contact the reporters on this story:
Jeff Green in Southfield, Michigan, at
