GM offers workers $140k to leave

[WashUJon]

NEW YORK (CNNMoney.com) - General Motors Corp. is offering its hourly workers as much as $140,000 each to leave the company as the embattled automaker made its latest effort to cut labor costs and end billions of dollars in losses.

GM announced an agreement with the United Auto Workers union Wednesday, although it did not give the details of the offer being made to all 113,000 U.S. hourly employees. But a source familiar with terms of the offer confirms those UAW members with 10 years or more service with the automaker will get $140,000 if they agree to forsake the retiree health care coverage that has become a crippling burden for GM.

Those with less than 10 years service time will get $70,000 if they leave without the health care coverage.

The company also announced a much anticipated agreement Wednesday with bankrupt auto parts maker Delphi and the United Auto Workers that is seen as a key to avoiding a crippling strike at that key supplier.

GM (Research) will pay certain Delphi employees $35,000 to retire early and offer jobs at GM to 5,000 Delphi employees, according to a statement from Delphi (Research). GM hourly employees who are eligible for retirement are also being offered $35,000 to retire early.

GM has job guarantees with the UAW members that run through September 2007, but it announced plans in November to close a dozen plants and facilities and trim 30,000 hourly jobs in North America.

\"We said we'd be working with UAW leadership to develop an accelerated attrition program that would help us achieve needed cost reductions as rapidly as possible, while at the same time responding to the needs of our employees,\" said a statement from GM Chairman and CEO Rick Wagoner. \"We are pleased that this agreement will help fulfill that important objective.\"

GM lost $10.6 billion in 2005 and its executives have not said when they expect it to return to profitability. They have said an agreement with Delphi as well as an agreement with the UAW to cut its own labor costs were keys to that return to black ink.

GM also has contract obligations to the union members at Delphi, which it spun off in 1999. It said those costs could have gone as high as $12 billion, though last week it said the cost would likely be closer to the $5.5 billion pre-tax charge it took in the fourth quarter.

GM announced Wednesday it will take additional charges this year as part of the new offer.

Besides those contract obligations, GM had an incentive to help Delphi trim its labor costs to avoid a potentially crippling strike by the union at the parts maker, which is still GM's largest supplier. Delphi executives had demanded deep concessions from the union and set a March 30 deadline for a cost-cutting deal, threatening to go to the bankruptcy court to have its labor deals thrown out without an agreement. The union had threatened a strike if Delphi had taken that step.

\"An accelerated attrition plan will help enable the transformation of our U.S. manufacturing and support operations into a much more competitive cost base,\" said a statement from Delphi Chief Operating Officer Rodney O'Neal.

Delphi said that it will continue talks in an effort to achieve a comprehensive agreement with the UAW and other unions at Delphi. But the three-way agreement is generally seen as clearing way for those new labor pacts.

It will present the agreement with GM and the UAW on the early retirement and the return of 5,000 UAW members to the autoworker to the bankruptcy court on April 7.



http://money.cnn.com/2006/03/22/news/companies/gm_delphi/index.htm?cnn=yes

[WashUJon]

Interesting editorial on GM's plight:

Maybe they're looking down from that great used-car lot in the sky at the havoc they wrought. They were the rival, now forgotten teams of negotiators who, one and two generations ago, fashioned labor contracts between General Motors and the United Auto Workers. They always gummed for the photographers in the handshake pictures after they signed each new and costlier pact. Off camera, it turns out, they were slitting each other's throats.

Not that they knew that at the time. The company bought labor peace and kept its factories humming. The employees got wages and benefits that, today, have swollen to some $74 an hour. Trouble is, that shortsighted pattern inflated production costs so high that GM now has to shed its workers by the tens of thousands.

Nor were GM and the UAW alone in their shared delusion that somebody far down the line would be able to afford whatever mutually enriching deals they could cut. Other industries--steel and airlines, to name two--danced these dangerous marathons with their workforces, often all the way to Bankruptcy Court.

Thus Wednesday's news of GM's expensive buyout and early-retirement deal with the UAW and parts supplier Delphi Corp. is but the latest evidence that many of the informal compacts forged long ago by now-departed leaders of labor and management can't--won't--be sustained.

Today's generation of leaders on both sides of negotiating tables increasingly realizes that turbulent reality. Example: It's hard to accuse GM of trying to boost profits on the backs of its laborers when last year's profit was, in fact, a $10 billion loss. Maybe earlier GM managers made poor decisions, such as building cars in too many brand names. But the company's plight today is as genuine as its evident determination to survive.

Granted, there's limited sympathy in UAW union halls for well-paid corporate executives who can't make their numbers. Just as, in moments of whispered candor, there's limited empathy for union bosses who never get grease on their hands. But in this case, both of those leadership groups in power today have inherited so-called legacy problems not of their making.

We'll leave predictions on the prognoses for GM and its departing workers to Wall Street analysts and Main Street retirement counselors. All of us are, though, likely to see this movie again and again. Rising protectionist sentiment in this country certainly can damage our overseas trade, but it can't halt competitive pressure from more cost-efficient manufacturers overseas.

For Americans of any occupation who are plotting their own futures, one lesson is obvious: Our security depends on choices we make--how much education we pursue, how much additional training we embrace as our careers progress, how maniacally we save. Whatever future security others promise us, no matter how well-intentioned they be, they may not be able to deliver.

The most ambitious security promised in our society, of course, is Social Security. President Bush warned last year that as structured, that system can't meet its future obligations. Think of it as GM's pension burden writ large.

Bush, you'll recall, proposed individual Social Security accounts so Americans could count on benefits set aside in their names.

And we all know what happened. Remember those congressional Democrats, wildly cheering their obstruction of Social Security reform during the president's State of the Union address?

And why not? Things always work out, right? Just ask those old GM and UAW negotiators, gazing down at the crisis they didn't expect.
http://www.chicagotribune.com/news/opinion/chi-0603240265mar24,1,6163648.story?coll=chi-opinionfront-hed