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Buyouts a consideration in light of job loss

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Mike DuPre'
April 29, 2008
— The question remains open on how General Motors’ offer to trim employment through buyouts will affect who will keep their jobs at GM’s truck plant in Janesville.

The automaker announced Monday that it will end the second shift at the Janesville factory and eliminate some 750 jobs.


The plant makes full-size sport-utility vehicles for Chevrolet and GMC on two shifts with about 2,840 hourly and salaried workers.


Employees have until May 22 to decide on buyout, retirement and early retirement offers, which vary depending on workers’ years of service with GM.


As of Monday, more than 200 people had signed up for early outs from the plant, sources have told The Janesville Gazette.


How many people take the offers and the years of seniority they will take with them from the local plant will determine the years of seniority needed to keep a job at the scaled-back factory.


The answers to those questions won’t be known until after the May 22 buyout deadline.


Employees whose jobs are eliminated will be placed on indefinite layoff and be eligible for regular state unemployment compensation and the supplemental unemployment benefits negotiated between GM and the United Auto Workers, GM spokesman Chris Lee said Monday afternoon.


In addition, they can apply for transfers to open jobs within the corporation, Lee added.


News of the second shift’s elimination is a signal that all employees should consider buyouts and examine their personal and professional situations, said John Berkley, a former GM worker and now a financial adviser with SII Investments.


“You cannot underestimate the seriousness of what’s going on and the decisions they have to make,” Berkley said.


Noting that at its high point the Janesville GM plant employed more than 7,000 people, Berkley said: “They’ve already closed two-thirds of that and now are getting rid of half of the remaining third.


“The trend in the industry is not positive, but in Janesville, it’s particularly not positive because of the age of the plant and its product line.”


The Janesville plant is GM’s oldest assembly facility. It makes GM’s most profitable—but also least fuel-efficient—vehicles.


Berkley noted that each employee has a different situation and different concerns.


The most basic question workers have to ask themselves, Berkley said, is: “Do I have enough confidence to leave General Motors and go out and have at it? That’s a tough, tough decision.”


Workers thinking about taking early retirement or a buyout should weigh several factors, he said, listing:


-- Would leaving GM be retirement or a transition to another career?


-- How much have they saved? How much income do they need to preserve their lifestyles?


-- Are they adaptable? Do they think they can tackle new circumstances?


-- Can they move without too much disruption to their lives?


“Every single case is different,” Berkley said. “Everybody should look at all the variables and make a good business decision.”


Some people think GM announced the end of the second shift to prompt workers into buyouts, so the automaker can turn around and hire new workers at the lower “second-tier” wages negotiated with the UAW in the last contract.


“Second-tier” workers are employed at jobs defined as “non-core” to the assembly of vehicles, GM spokesman Dan Flores explained Monday.


Only non-core workers are compensated with second-tier wages—$14 to $16 an hour—and second-tier benefits, Flores said. Core assembly workers will continue to receive traditional, pre-contract compensation from GM, about $28 an hour and full benefits.


A non-core job, for example, is material handling, Flores said, so the worker actually affixing a bumper to a Chevy Suburban would be a core worker, while the worker who delivered that bumper to the assembly line would be a non-core material handler.


Also defined as non-core work are some pre-assembly jobs—such as putting together doors and instrument panels that other workers will install in new vehicles.


Read more in our special section on the GM cutbacks.

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