Buyouts at GM open door for hiring at lower wages

The 7,631 United Auto Workers who accepted early retirement and buyout offers this week from General Motors Corp. -- more than 53 percent of whom work in Michigan -- will make room for laid off workers to reclaim their jobs.

More importantly for GM, the departures give the automaker room eventually to hire new workers at half the hourly wage, a key to helping the company slash costs and comply with a $13.4 billion federal loan package. The loans require GM and Chrysler LLC to bring wages in line with those paid by foreign automakers at plants in the United States.

But GM likely will not be able to hire lesser-paid workers until the worst sales market in 27 years improves.

"We certainly hope to be able to realize some of that (savings) going forward, but clearly the evaporation in sales put a hold on that," GM spokesman Tony Sapienza said. "When the dust settles, we'll still have people laid off, but we'll be able to bring a lot of laid off people back to work."

A small number of laid off workers have already returned for training and more are expected to return after April 1, the date workers who took the buyout must leave.

The Detroit automaker offered $20,000 cash and a $25,000 voucher that can be used toward buying a new GM vehicle, a lure that while less than the $140,000 deal offered in recent years, helped bring GM's total hourly headcount reduction to more than 60,600 since 2006.

Under the terms of the UAW collective bargaining agreement reached in 2007, new hires receive $14 an hour, about half the wage of current workers, as well as less-extensive benefits.

But since two-tier wages went into effect, there has been little need to hire new workers. The downturn in the economy has led to a series of production and capacity cuts to bring supply in line with a dramatic drop in demand.

GM likely will need to eliminate more workers to cut additional costs, said analyst Aaron Bragman of IHS Global Insight.

"GM has got to get turnover. If they can bring new people in at lower wages, that's what's going to get them to profitability," he said. In Flint, where GM is adding a new engine line for its Chevrolet Cruze small car and Chevrolet Volt extended-range electric vehicle, 634 workers in six facilities took the deal.

The promise of the Volt engine line discouraged more workers from accepting buyouts, said Bill Jordan, president of UAW Local 599 in Flint.

"There are some people who at one point thought this site would be gone by the end of next year and now they know it's not going to be gone, so they said, 'I'm going to stay,' " Jordan said. "It's definitely resulting in people being called back to work."

The offers drew large participation in idled plants or at facilities with uncertain product futures.

GM's Janesville, Wis., plant had 624 workers accept the offers, the largest concentration at any one facility. The Janesville plant was shut down at the end of last year, ahead of a planned closure that was supposed to take place in 2010.

Another large concentration of workers came from GM's metal plant in Grand Rapids, where 596 workers accepted offers. Locally, 579 workers are leaving the Willow Run powertrain plant while 386 workers are leaving an assembly plant in Orion Township and 142 from the Detroit-Hamtramck assembly plant.

In all, about 12 percent of GM's hourly U.S. work force accepted offers, which were available to all of the company's 62,000 hourly workers. GM said it wanted to see at least half of the 22,000 retirement eligible workers leave.

You can reach Robert Snell at (313) 222-2028 or rsnell@detnews.com">rsnell@detnews.com.