GM offers buyout to laid-off workers
That's the gist of the latest General Motors cost-cutting offer to its 62,000 hourly employees, including the 2,000 or so laid off from its assembly plant in Janesville.
GM's most recent buyout offer—a cash payment of $20,000 and a $25,000 car voucher—is its third in three years.
In 2006, about 26 percent of the local workforce accepted an offer to leave the Janesville plant in exchange for packages that ranged from $35,000 to $140,000. Last year, 574 of the plant's 2,200 workers left with deals that ranged from $45,000 to $140,000.
Both the 2006 and 2008 offers included pre-retirement components that pay benefits as a bridge to full retirement at 30 years.
Today's offer does not differentiate between employees eligible for retirement at 30 years and those who aren't. Retirement-eligible employees who take the deal will be able to continue their health insurance and retirement benefits. Those who aren't eligible for retirement would take the cash and the voucher, surrender health insurance and retirement benefits and sever all ties with the automaker.
Chrysler also is offering its workers a new attrition plan.
Chrysler's offer to retirement-eligible workers includes $50,000 cash and a $25,000 voucher to buy a car. Buyout offers to those not near retirement includes $75,000 cash and a $25,000 car voucher.
Chrysler's buyout offer is more lucrative, with $115,000 plus a $25,000 car voucher, for workers with 10 or more years of seniority at closed plants in Missouri and Delaware.
Both GM and Chrysler have seen sales decline and have taken government loans in order to survive.
Chrysler received $4 billion and expects to get another $3 billion after it shows the government Feb. 17 its plan to become viable. GM has received $9.4 billion and expects to get $4 billion more when it files its plan.
Conditions of those loans require the automakers to make changes to their contracts with the United Auto Workers, including the elimination of the jobs bank that provides workers most of their pay even when they are laid off.
Chrysler, GM and the union agreed to end the jobs banks Monday.
Some industry analysts have speculated that the new round of offers may be more appealing to workers who are on indefinite layoff due to the U.S. auto sales slump.
But the early speculation in Janesville is that the take rate for GM's latest offer will be low. That's primarily because the cash offer of $20,000 is so much lower than previous offers. Because the cash would be taxed, workers who are close to retirement said they won't walk away from their retirement benefits for such a small sum.
In Janesville, GM laid off 852 workers last summer when it cut production of full-size sport utility vehicles from two shifts to one. Another 1,200 workers were laid off when the automaker ceased local SUV production in December.
The laid-off workers are eligible for state unemployment compensation, which typically runs 26 weeks and maxes out at $355 per week. Negotiated supplemental unemployment benefits boost that amount to cover a majority of the workers' weekly take-home pay.
When state unemployment runs out, the SUB pay fund keeps the paychecks coming for another 22 weeks.
After 48 weeks of state unemployment and SUB pay, workers would have moved into the jobs bank, but it ended Monday.
Circumstantial provisions in the contract, however, would extend the worker-supported SUB pay beyond 48 weeks.
Today's buyout offers are attempts by GM and Chrysler to again cut their payrolls. The companies can leave the jobs vacant for now, then fill them later with new workers who can be paid about half of the $28 per hours that current employees make.
Workers at both companies have until Feb. 25 to accept the offers.
Material from the Associated Press was used in this story