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GM Says 7,500 Hourly Workers Decide to Leave

posted on March 27, 2009


DETROIT (AP) — About 7,500 General Motors Corp. workers — roughly 12 percent of the automaker's U.S. hourly work force — have signed up to take buyout and early retirement incentives to leave the company, GM said Thursday.

Also, Chrysler LLC said Thursday it would extend its deadline to entice blue-collar workers to leave. The old deadline was Friday.

GM offered $20,000 cash and a $25,000 voucher to buy a car to all of its 62,400 hourly U.S. employees in an effort to further trim its blue-collar work force to match reduced sales.

Most of those who chose to leave took early retirement offers, said a person familiar with the numbers who did not want to be identified because the breakdown had not been made public. There were very few who took the buyouts, the person said.

The deadline to decide was Tuesday, and many of the workers waited until the last minute to turn in their paperwork, the person said. The workers have seven days from the date they turn in the paperwork to rescind their decision, so many will have to decide by March 31.

For those that will leave, the effective date of their departure is no later than April 1, GM said in a statement.

Both GM and Chrysler are living on a total of $17.4 billion in government loans and are seeking another $21.6 billion. The Obama administration's auto task force has indicated it may offer more aid, but further concessions are possible from both the companies' stakeholders.

Both companies have to submit completed restructuring plans to the federal government by March 31.

The latest round of buyouts and early retirements at GM was the third for the company since 2006. From all three offers, more than 60,000 workers have decided to leave the company.

The departures and other actions taken by the company "will help ensure the long-term viability and future success of General Motors," Gary Cowger, group vice president of global manufacturing, said in a statement.

GM has enough workers on layoff to fill all 7,500 vacancies created by the departures, the person familiar with GM's plans said. But if demand increases and more workers are needed, the company could hire new people at a new lower-tier wage of about $14 per hour, the person said.

The UAW agreed to the lower-tier wage in its landmark 2007 contract with the automakers.

More workers agreed to leave the company at plants that are slated for closure, according to the GM statement. The company said 624 workers took the offers at its Janesville, Wis., sport utility vehicle plant, which closed last year. The plant employed 1,200 people. At the Grand Rapids, Mich., metal stamping plant, which also is slated for closure by the end of this year, 596 of 2,700 workers took the offers, the company said.

Many other factories had 300 or fewer workers take the offers.

GM shares rose 37 cents, or 12.4 percent, to $3.36 in afternoon trading.

At Chrysler, uncertainty over whether the company would get further government loans kept many workers from making a decision on whether to take the offers.

United Auto Workers officials notified factory workers Thursday that the offers had been extended until sometime after the date that union members ratify contract concessions with the company.

Details of the concessions have not been made available, said Chrysler spokesman Max Gates, and no date has been set to vote on the new terms.

"We want our employees to make a fully informed decision," he said. "And part of that decision may be understanding ramifications of the proposed UAW contract."

Once the contract is ratified, Chrysler will determine a deadline, Gates said.

Workers must notify the company by Friday if they are considering one of the offers, but they do not have to commit on Friday.

The UAW has tentative deals with Chrysler and GM on concessions, but both companies are still negotiating how to swap equity in the automakers for cash payments into a union-run trust that will take over retiree health care costs next year.

Under the terms of the loans, the automakers must replace half their cash contributions to the trusts with stock or other equity. But the union has been reluctant to sign a deal until it knows whether debtholders will make concessions to the companies.

Negotiations with GM bondholders and Chrysler debtholders are continuing but have become contentious.

Chrysler workers can get $75,000 cash buyout and a $25,000 voucher to buy a car to leave the company. Workers eligible for early retirement can get $50,000 and a $25,000 car voucher.

Ford's 42,000 U.S. hourly workers also have been offered new early retirement and buyout packages. They can start taking the offers April 1 with a May 22 deadline to accept.


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