GM ups the ante on employee buyouts
GM is making better, more attractive vehicles, yet after losing nearly $40 billion in 2007 (most of which was an accounting adjustment, mind you), the Detroit automaker still has a lot of work to do to become profitable again here in the States. Even though GM shed 34,000 jobs in 2006, the company still has 46,000 retirement-eligible workers on the books. Those workers still make $28 or more an hour, and have some of the best benefits money can buy. To get high-paying workers out and less expensive replacements in, here's what GM is offering in its newest round of buyouts. Retirement-eligible general labor folks are being offered $45,000 lump sum payouts and $62,500 are up for grabs for skilled tradesmen. Those who choose the buyout option can take a single lump sum payment, or elect to put all the money in a tax-free 401k. Non retirement-ready workers, meanwhile, can receive between $70k and $140k to walk away form the line. UAW chief Ron Gettelfinger estimates that 20,000 out of 74,000 remaining workers will take a package, and the General would likely love it if union Ron were right. Since the cash-saving VEBA contained in the latest union contract won't take effect until 2010, cutting labor costs is GM's best bet for making money in the U.S., aside from developing more attractive vehicles.
[Source: Detroit News]
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Reader Comments (Page 1 of 1)
maxconfus 8:24PM (2/14/2008)
cramer was talking about gm eventually becoming a non-union automaker, possibly in the nearer, like 10-15 years, future. maybe others have heard this but I was surprised.
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Corey W. 9:24AM (2/14/2008)
Accounting adjustment?? Wish I could used that BS excuse with the IRS... LOL!!
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rgseidl 9:26AM (2/14/2008)
The losses GM announced this week were real enough, they just occurred over a number of quarters in the past. The new accounting rules only mean companies can no longer hide the bad news forever.
Revenue from current operations is looking better than it used to, but GM nevertheless chose to let the announcement of the voluntary redundancy program immediately follow the earnings statement. That's appropriate, in that the losses were due in part to excessive labor costs. Future hires - if and when they become possible - will no doubt be offered lower wages and benefits.
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roar 12:11PM (2/14/2008)
Funny, Toyota loses money in Japan, makes all of it's profit in the U.S. and elsewhere. GM loses money in the U.S. and makes money elsewhere.
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Richard Warren 12:30PM (2/14/2008)
Actually you can Corey W, start a business, this happens more than many realize.
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j_diesel 4:32PM (2/14/2008)
if my employer offered me this deal i'd be all over it. especially if i was less than 5 years from retirement anyway.
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