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GM launches new attrition program

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JAMES P. LEUTE
February 12, 2008
— A new round of buyouts and early retirement offers to all 74,000 General Motors hourly workers in the United States is expected to help the automaker cut costs and hire lower-cost replacements.

Workers at the GM plant in Janesville, where about 2,500 hourly employees produce full-size sport-utility vehicles, learned of the offers this morning.


Early indications are that a significant number of Janesville workers might accept one of the offers, local union officials said.


Today’s announcement, which has been hinted at for weeks, follows an attrition program launched earlier this year for 5,200 workers at GM’s service parts and operations facilities.


Last fall’s national contract agreement between the Big Three automakers and the United Auto Workers set the stage for the buyout and retirement offers. While guaranteeing some jobs, the deal allows the automakers to hire “second-tier” workers at wage and benefit rates that are expected to be about 50 percent below what current UAW members are paid. For most positions, new hires would be paid about $14 per hour.


Buyout offers from GM and other U.S.-based automakers come amid concerns about the strength of the U.S. economy and the possibility that truck and car sales could slump more in 2008, after a drop in 2007. The automakers have been cutting capacity to match their declines in market share, and their new UAW contracts allow them to shift union retiree health-care obligations to union-controlled trusts.


“We’ve worked with our UAW partners to ensure our employees have a variety of attractive options to consider,” said Rick Wagoner, GM chairman and CEO. “The special attrition program is an important initiative that will help us transform the workforce.”


GM’s current offer takes either a retirement or cash buyout form. The retirement component will allow eligible employees to leave with small payments and full pension and retirement health-care benefits. While the buyout options offer more money, they don’t carry any future benefits.


The current offers are similar to those offered GM’s hourly workforce in 2006, when more than 34,000 workers left GM after accepting buyout packages that ranged from $35,000 to as much as $140,000.


More than 900 Janesville workers—about 26 percent of the local workforce—accepted the 2006 offer in one form or another.


GM’s current buyout offer comes at an interesting time for the Janesville plant, which will reduce the speed of its assembly line to help meet production cuts driven by slow sales of the big SUVs.


Starting in April, workers on two shifts in Janesville will produce 44 SUVs an hour, down from the current rate of 52 jobs per hour.


In preparing for the slowdown, local plant and union officials have said they expect that an hourly workforce of about 2,100 will be required. That’s about 400 fewer hourly employees than the plant currently employees, and plant officials have said the reduction would likely be achieved through layoffs.


But they’ve also said the reduction is dependent on the attrition program GM unveiled today. If 400 local workers opt for the buyouts, layoffs likely would not be necessary.


If more than 400 workers leave, GM might have to hire employees for the Janesville plant at the lower wage rate of $14 per hour.


UAW Local 95 Shop Chairman John Dohner Jr. said while the retirement package is good for those employees who are ready to retire, the overall attrition package will likely eliminate a large number “of good, family-supporting jobs.”


UAW Local President Mike Sheridan wouldn’t guess how many Janesville workers might opt to leave, but the numbers suggest the departure could be significant.


Nearly 1,000 of the plant’s current workers have 26 years or more of service, which would make them eligible for GM’s early retirement options, Sheridan said. Nearly 1,300 workers have between 10 and 26 years of service, while 373 have less than 10 years.


“There’s a real buzz on the floor this morning,” Sheridan said in reference to dueling news of the attrition program and Barack Obama’s planned visit on Wednesday.


Sheridan said it is his hope and expectation that GM will hire new employees to replace those who leave early.


“We will be working with the UAW to manage any individual plant’s manpower needs,” said GM spokesman Dan Flores. “We certainly expect to be hiring at several plants at the non-core rate.”


Flores wouldn’t put a target on the number of employees GM would like to see leave the Janesville plant or any other facility.


“We think this is a very solid offer that provides our employees with a variety of options,” he said. “It’s a voluntary program, and it comes down to personal choice.”


GM representatives said it would take weeks to introduce the complicated buyout offers to its workers, who will have 45 days to consider them and then seven days to reconsider. It expects to complete the voluntary program by July 1.


Material from Gazette wire services was use in this story.
BUYOUT DETAILS

General Motors and the United Auto Workers have rolled out a special attrition program that will be offered to all of GM’s 74,000 UAW-represented employees. Specific details will be presented at all GM plants, and the automaker expects to wrap it up by July 1.


The details:


-- Retirement pension incentives of $45,000 for production workers or $62,500 for those in skilled trades positions. Employees can take the incentives as a one-time, lump-sum cash payment, as a rollover into their GM 401k or Individual Retirement Account, as a monthly annuity or as a combination of a partial lump-sum payment and direct rollover into the 401k or IRA.


-- Other retirement options would allow employees who are at least 50 years old with 10 or more years of service to retire with a pension payment and full benefits.


Employees with 26 to 29 years of service will be allowed to grow into the “30 and out” retirement package. Until they reach 30 years of credited service, employees would receive a fixed monthly payment with full benefits.


-- Cash buyouts for employees who agree to voluntarily quit and sever all ties with GM. Employees with 10 or more years would get $140,000, while those with fewer would receive $70,000.



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