General Motors Corp. announced Feb. 12 that it wants to buy out all of its 74,000 U.S. hourly employees who are represented by the United Auto Workers. If the plan works it will trigger one of the largest reductions in the unionized auto work force in living memory and eventually require the union to start rebuilding itself all over again.
Communities that depend on auto production see this permanent elimination of auto jobs as an increased threat to their economies. In Michigan and Ohio, particularly, cities and town are already being crushed by the mortgage foreclosure crisis.Workers will get the details over the next several weeks but the company has already said that it expects all those who accept the buyouts to be out the door by July 1. Under its new contract with the UAW, GM will be able to replace up to 16,000 workers with new employees who will be paid half the old wage of $28 per hour.
Ford Motor Co. and Chrysler LLC already have announced similar buyout offers.
Ford announced last month it will offer buyouts to all of its 54,000 UAW represented employees who it wants out the door by April.
Chrysler, which is trying to cut up to 21,000 of its 45,000 UAW employees, is giving workers on temporary or indefinite layoff up to $100,000 to sever ties with the company. Chrysler says it also wants everybody out by April.
Immediately after the cuts were announced Tuesday by GM shares rose 75 cents, or 2.8 percent, to $27.87 in stock market trading.
GM conducted a round of buyouts in 2006, when 34,410 workers left the company.
The buyouts, which amount to a new round of unprecedented jobs cuts by all three Detroit auto makers, come just months after promises of job security convinced a majority of union members at the Big Three companies to ratify four year contracts many feel would otherwise have been rejected. The contracts, which were opposed by many union local leaders and by many workers, were the most concessionary of any in the auto industry’s history.
The latest strategy of mass buyouts allows the auto giants to permanently shrink the work force while it lessens worker anger by bringing back some of those who have been laid off. Workers with less seniority, in turn, are frightened or lured into taking one time cash payments of $100,000 – $140,000 and give up their good paying union jobs forever.
GM is giving workers just 45 days to make the life changing decision it is asking them to make. Rick Wagoner, the company’s CEO, has made it clear that if enough workers don’t rush their life altering decision the company will respond with more forced layoffs and perhaps additional plant closings.
Communities that depend on auto production see this permanent elimination of auto jobs as an increased threat to their economies. In Michigan and Ohio, particularly, cities and town are already being crushed by the mortgage foreclosure crisis.
For GM, however, things are looking up. With the new contract and the additional cuts the company expects, in four years, to cut labor costs in half. Add in Ford and Chrysler and the companies have a combined labor cost savings of something like $6.5 million per hour, according to the Detroit News.
Observers also note that the companies would not be beyond using the immediate cost of the buyouts as a “net loss,” requiring new concessions in the middle of the contract. The current contract allows the company to do this.
GM has already made clear what it intends to do with all the extra money it makes as a result of the buyouts. “Within a decade, up to 75 percent of GM sales could be in foreign markets,” Wagoner told the Detroit News on Jan. 18.
The companies are also transferring production from union plants in America to non-union operations in Latin America and Asia.
Comments