General Motors Corp. (NYSE: GM), which today reported an auto industry record loss of $38.7 billion in 2007, is offering its unionized workforce of 74,000 a buyout package. The automaker, along with rivals Ford Motor Co. (NYSE: F) and Chrysler LLC which have offered similar deals, better hope that too many workers don't take it up on its offer.There is going to be a steep learning curve for even the brightest of newly hired GM employees who under a new UAW contract receive half of the old wage of $28 per hour. Moreover, the last thing that Chief Executive Rick Wagoner wants is for GM's assembly lines to be staffed by inexperienced or overworked employees. The results of that could be disastrous.
Many workers, though, are going to take GM's offer and who can blame them. Workers with 10 or more years service can opt for a one-time payment of $140,000 to leave the company and those with less service could take a $70,000 pay out. These employees may be able to squeeze even more money out of the automaker in the coming months by being hired back as consultants at wages that are much higher than they are getting now.
But I doubt that GM and the rest of the U.S. auto industry can grow its business through cutting costs alone. At a time when global competition is becoming brutal, The Big 3 can't afford to lose too many workers who know how to build cars that people want at prices they can afford.
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Reader Comments (Page 2 of 2)
2-19-2008 @ 11:55AM
j diponzio said...
DOUG,
YOU HIT IT ON THE NOSE.GUY'S LIKE GLEN ON COMMENT #18,JUST DON'T GET IT.
2-20-2008 @ 8:26PM
Steve said...
The trouble with too many people leaving will be an open invitation to quality disasters despite attempts to train new hires.These jobs are far more complex and vastly more difficult or loaded than they were 15 or 20 years ago.Foreign manufacturers have foreign government subsidized health care and the well documented foreign exchange manipulation trade policies toward free trade as they have for the past 35 years.There has been NO REAL WAGE INCREASES in hourly wages for at least the past 12 years.Wages and benefits have gone up due to COLA increases tied to the CPI and health insurance premium inflation thanks to the medical pharmaceutical and insurance industries.The 30 plus year old stereotype of the fat lazy overcompensated autoworker does not play anymore.White shirts should be grateful they have the benefits they get due in no small part to the unions.Washington insiders and free traders don't get it and won't get it until mass panic is placed upon them.
2-22-2008 @ 11:52AM
jpdr1100 said...
Spoken like a true union member. Everything that anybody got, ever, anywhere in the country, is because of you guys.
It must be nice to have had so much power.
2-19-2008 @ 11:46AM
jpdr1100 said...
You people bashing the import brands which produce here need to update your facts. The Japanese and Germans pay wages that were comparable to those of the UAW (within $1-2 per hour) BEFORE the UAW agreed to the pay cuts. So they are now typically higher. Where they lack is in the retirement package, but since that has now been shifted to the UAW, there is littel difference. Most just offer a 401k, as do most American corps.
As for the old "profits go overseas" argument, you need to look at just how much that profit is. It is far less than the costs of material, labor and overhead that gets spent right here.
BTW, Detroit build a great deal of its product in Canada, which also has socialized medicine. Why do we not hear you screaming about that unfair advantage?
2-23-2008 @ 7:03PM
mark said...
I work for Gm for 23 years now. the workers do a great job it is the higher up people that really screw things up. they have no clue how things are run. what they say goes whether it is right or wrong. what i can't understand is how could they lose thirty some billion dollars whoever wrote that article is wrong gm had record sales north american operations showed a profit of 23 million. first time ever around the wourld they had record profits
2-25-2008 @ 3:56PM
Tony said...
For the full year of 2007, GM reported a loss of $38.7 billion, attributable to a special $39 billion charge taken in the third quarter. Excluding the special charge, GM lost $23 million in 2007, due also to large losses at GMAC caused by the subprime and housing crisis. That compares with a $2 billion loss in 2006.
3-21-2008 @ 2:02PM
aturnbull8 said...
Please listen clearly; In Japan and Korea there auto workers belong to strong and vibrant unions. In these countries they have national heathcare. They would never allow our domestics manufactures into there countries because they have more self respect then that. They would also never allow these auto's through there ports. They own 52% of our market now and it will grow larger. All of there plants here are non union in right to work states were unions are not welcome. They are given tax breaks to build there plants here. It cost them less to bring there vehicals to market because they have not been here 100 years and do not carry the same legacy cost as our domestic's. What we are seeing today has been in the works for the last 20 years. Our goverment is using this to destroy the unions in our country and therefore enlarge the corporate profits. The big gun our country uses to destroy the unions are "HEALTH CARE GREED" It is going to be very very bleak what our futures will be like. Now go continue to by you asian auto's.