UAW President Ron Gettelfinger said the latest buyout group would be smaller than General Motors' (NYSE: GM) 2006 buyout, when about 34,400 workers -- or one-third of GM's unionized workforce -- accepted deals, The Times reported.
GM's shares were virtually unchanged Friday on the news, rising about 10 cents to $25.92.
Too few taking buyout?
GM's plan is part of an ongoing effort to substantially reduce operating costs. GM lost $38.7 billion last year, and analysts say another successful buyout program is critical to the auto giant returning to profitability in 2008. Independent stock analyst C. Leonard Bauer, formerly of Prudential, told BloggingStocks Friday a potential 20,000-worker buyout is "a decent number" but he wants more.
"The sense is that GM is going to need upwards of 25,000 workers or more to take the buyout to continue to move the football down the field," Bauer said. "GM is doing a good job lowering legacy costs and getting average costs per employee down, but the buyout will not net as large a savings as the number would imply, because there will be replacement workers. That's why analysts want to see a bigger buyout number." Bauer added that he does not have a rating on GM or own the company's shares.
GM's workforce
GM has said it expects to replace nearly all of those workers bought-out with new workers, paid at a lower pay scale, most likely starting at $15-18 per hour. GM's current average pay rate for assembly workers is about $28 per hour.
According to his analysis, Bauer said GM must reduce its average assembly worker pay rate to about $18-20 per hour to remain competitive in the global auto market. An average pay above $23 would keep the auto giant at a competitive disadvantage versus foreign automakers, he said, something the company must avoid.
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Reader Comments (Page 1 of 1)
2-15-2008 @ 12:52PM
pzy76r said...
GM's plan to grow down the work force is great, but GM can well afford to buyoff it's current worker with more than chump change. If they really wanted to get people to leave, they would offer more like $100,000 per worker. They would still make there money back before the end of this agreement. Then GM would be a lean, mean company ready to take on the world market.
2-20-2008 @ 9:14PM
bnreynolds said...
I retired in May of 07 and missed both buyouts. I'm a little disappointed. I was wondering if there were anymore like me out there.