GM launches new attrition program
Podcast Episode
The Janesville Gazette Business Editor Jim Leute previews his story on a new GM-UAW agreement on a new buyout program. Jim and I interview UAW Local 95 President Mike Sheridan on the buyout plan and Wednesday's Barack Obama appearance at the Janesville GM plant.
Photo
Unsold 2008 G6 sedans sit in a long row at a Pontiac dealership in Littleton, Colo., on Sunday, Jan. 27, 2008. General Motors Corp., the make of Pontiac, reported the largest annual loss for an automotive company Tuesday Feb. 12, 2008 and said it is making a new round of buyback offers to U.S. hourly workers as it struggles to turn around its North American business amid a weak economy.
JANESVILLE — 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.
Feb 15, 2008 at 8:31 p.m.
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RUserious..... I haven't had to work 40 hours even in a month since I left. "I dug my well before I was thirsty"! Like I said, not everyone has it in them to step out and do something different. It doesn't make me better than anyone else! That's not the purpose of my post. Why can't anyone just go with the flow rather than try and read into everyone's motives?? I don't get it.
Feb 15, 2008 at 12:38 p.m.
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So Kleej-what if GM hadn't offered you $140,000 to leave? Would you be less of a person if you'd been "forced" to stay? And what's the difference in closeness to your family (if that is your intended goal) if you work 40 hours there or 40 hours elsewhere? Are you using the approximately $80-$90 after tax dollars to prepare for a better job-or using it to take a year or 2 off to be with your family? If it's the latter, how will you be better suited to support them after the $ is gone?
Believe me, I think it's great that you and (everyone who took it) have this great opportunity to choose a direction that is more suited your taste with this nice bit of financial freedom, but there are those who would like you to know that they do not feel like they've ruined their lives working there, but have actually improved and enriched their lives because of the opportuniies offered by the good pay and even educational opportunities offered through the company. (not to mention the peace of mind because of the good benefits.)
I'm glad that you and others who've taken the buyout can maybe find what you're looking for-best of luck to all who did or will move on, and to those deciding to stay.
Feb 14, 2008 at 10:29 p.m.
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husbandofmath======== it is falling! People are borrowing money to support their recreation! Society teaches people instant gratification at any cost! Why do you think on an annual basis more people file for bankruptcy than there are college diplomas given out? Whey do you think 99% of America has debt? People are taught to finance everything so they can "have it now". They feel entitled to it. It's a free country, but, hear this....you may not want to hear it: "if you can't pay cash for something and you need to borrow money or put it on a charge card, you don't deserve to have it!" A mortgage is something else. You need a roof over your head. However, people all over are refinancing their homes to the hilt so they can have their toys! There's something called delayed gratification! Buy it when you have the money. If more people just lived that way, there wouldn't be so many parents out there working 4 jobs to make ends meet when they should be at home with their children where they belong! There would be less stress. We are in a society of people who live their lives for money rather than for family. And don't give me the ole' "well you gotta put food on the table" garbage either! Nothing wrong with that. It's the not living within our means that's pulling this culture right down into the muck! It's gotta change!
Feb 14, 2008 at 10:17 p.m.
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I was part of the 900 that left GM at the end of 2006. I don't look down at anyone or where they work. I had 10 years in that place and that was enough. It wasn't the worse place to work and it wasn't the best. I made the choice to blow 10 years of my life in that constantly "negative" environment! I was actually part of that negative! I admit it. I just decided to stop being bitter and get better. $27/hr wasn't worth not seeing my children grow up! It was the best decision I've ever made! There are options out there to do something more with your life..... you just have to take that step and make it happen. Too many people don't strive for being above average anymore. For those who choose to spend the next precious years of your life at that plant, God bless you. For those who choose to step out and move on.....I applaud you for your courage. It's not a life ending decision! It's the start of the rest of your life! God bless all of you!
Feb 13, 2008 at 7:34 p.m.
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What they are offering for a buyout is not a lot of money. I would think long and hard before I accepted an offer like that and I don't work at GM. You don't know what it is like to have to pay for your own health insurance.
Feb 13, 2008 at 3:05 p.m.
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The attrition plan has been around for decades. Build shoddy low quality overpriced vehicles, and expect people to buy them. Their plan is a success.
Feb 13, 2008 at 2:29 p.m.
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Actually, your post shows that the standards for programmers has lowered by your statement that they were overpaid and had to adjust.
Overpaid or not if a person goes from $100k per year of purchasing power to $60k per year of purchasing power their standard of living is lower. They may be closer to what the market pays and still a good living, but their standard is still lower.
Feb 13, 2008 at 12:54 p.m.
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I am one of those 40 year old workers. I am taking the buyout. I started classes at Blackhawk Tech. The way things are going at the plant, it won't be around in another 15 to 20 years. So I took preventitive measures for myself and my family. First GM took away health insurance, next it went to a 2 tier wage system, now the elimination of more jobs. What next? Fellow workers get out while you can, but don't just rely on the money from the buyout to get you bye. Take advantage of their educational system!
Feb 13, 2008 at 11:41 a.m.
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I find it ironic that in a country that believes in liberty and freedom so many want to dictate how companies are run. That doesn't work and never has.
No, standards haven't fallen for programmers and such they have corrected since the boom days when people were being way over paid because of the irrational exuberance of the stock market for internet and software companies. People always complain about falling living standards and yet we have bigger houses, bigger safer automobiles, more food, more entertainment. How is this falling I am not sure?
Feb 13, 2008 at 6:57 a.m.
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And it's not just to other countries that skilled jobs have been outsourced. I am a registered nurse and my Rock County job was "outsourced" to Dane County which in turn "outsourced" it to a private agency in Madison.
Feb 12, 2008 at 10:28 p.m.
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If you were to check into the details a little, there are skilled fields that have been outsourced to other countries with the results being a lower standard of living for those like computer programmers / technicians and associated fields.
Feb 12, 2008 at 9:28 p.m.
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When the plant first opened they made tractors. A labor saving device that cost thousands of jobs for farm laborers, however, I dont see anyone feeling bad about that. Working as a human robot your whole life isnt good for anyone either physically or mentally. Standards of living have only fallen for the unskilled which means learning some new skill is necessary to compete in the world. Luckily GM provides excellent educational benefits.
Feb 12, 2008 at 7:46 p.m.
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Yes, we are about to lose a whole sector of the middle class in this area and the results will affect everyone, young and old, rich and poor. And that seems to be the best case scenario. Just like with the stock market and the housing market, the wage bubble is bursting. I see a lower standard of living for everyone. I guess that is what globalization is, a lowering of the american standard of living.
Feb 12, 2008 at 6:24 p.m.
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I agree with you Sarah. People rip on the plant workers, but do not realize how the rest of the community depends on them. Half the wage means that half the money will make it to the local economy. That means less bought new vehicles, less money at the local restaurants and shopping malls, fewer people being able to afford new houses, etc. Which intern will cause businesses to down size and construction to slow. In effect hurting even more people’s lively hood and chances to find good paying jobs in the area. What about all the nice houses in town? With limited funds they will sit for sale for a long time or people are going to lose a lot of their investment in order to pawn them off. I don’t get a warm fuzzy feeling about all of this.
I feel for the 20, 30, and 40 year olds that work down there. They have some big decisions to make. The buyout might sound like a lot of cash up front, but long term it is not. Where are these folks going to find a comparable job in the community? Let’s say they stick it out, how long will it before the union has no bargaining power and they are down to $14/hr? Or worse yet, they pull the pin on the whole operation down here.
Stu
Feb 12, 2008 at 2:16 p.m.
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My gosh, there is a lot to think about in this article. The workers have a lot of options to consider, the impact to communities could be substantial as far as money available to make purchases (buyout bucks vs. lower incomes for new hires), the overall effect on unionized labor in this country, etc. It will likely even influence Obama's speech here on Wednesday.
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