Saturday, June 24, 2006

37,000 take GM, Delphi buyouts

Friday, June 23, 2006
37,000 take GM, Delphi buyouts
With just one day left, companies prepare for massive loss of workers taking incentives.
Brett Clanton / The Detroit News

With tonight's midnight deadline approaching for workers to sign up for buyouts, General Motors Corp. is taking pains to ensure that what may be the biggest downsizing effort ever undertaken in the U.S. auto industry goes off without a hitch.

By Thursday, more than 28,000 factory workers at GM and better than 9,000 at bankrupt supplier Delphi Corp. had filed paperwork accepting offers to retire early or take a cash payout to leave, according to sources familiar with the program.

The tally will undoubtedly grow by the time the sign-up period closes. The struggling automaker will be close to accomplishing a key piece of its turnaround plan -- the elimination of 30,000 hourly jobs by 2008 -- two years earlier than expected. And Delphi, which plans to close or sell 21 of 29 plants, will take another step toward emerging from bankruptcy in mid-2007.

As workers leave, GM will grapple with how to manage the mass exodus of workers without missing a beat at the factories that churn out its cars and trucks.

The Detroit-based automaker, which lost $10.6 billion last year, cannot afford a rocky transition at a time when it is counting on new vehicles to jumpstart sales and is doing everything it can to convince Wall Street that bankruptcy is not in the cards.

That's why more than two months ago the automaker sent a team to every plant with one task: To anticipate every possible production glitch that could arise because of the buyouts and fix them before they become problems.

While GM has experience managing a huge one-time exodus of workers -- 16,000 people left on a single day in 1993 after a record $23.5 billion loss the year before -- the coming departures could test the company in new ways. But officials say they are well prepared for whatever the so-called "accelerated attrition" program brings.

"The attrition program will undoubtedly drive a lot of transition in our plants in the coming months," said Dan Flores, a GM spokesman. "But we have definitely planned for that transition."

Neither GM nor Delphi officials would say exactly how many workers have signed up for the programs, saying an announcement would come early next week. But those numbers may still be preliminary because workers will have seven days to change their minds.

Some workers have already left under the program; many are expected to leave July 1. But both companies reserve the right to keep workers on until Jan. 1, 2007.

The massive program was designed to help the ailing companies reduce soaring labor costs without layoffs.

But a stronger-than-expected response may find GM scrambling in the coming months to plug holes at its plants, while the automaker is still trying to build vehicles at the same speed and quality level.

"Oftentimes, companies worry and put attention on buyouts and people who are leaving and neglect looking at the people who are remaining," said Linda Burwell, co-owner of Nemeth Burwell PC, a Detroit firm that specializes in workplace issues and corporate restructuring.

GM is determined not to let that happen.

Its plant-based teams have mounted a big board on the wall in the offices of many GM factories. On it are dozens of little boxes, each containing the name of a worker who is about to leave the company, and some idea of how their job will be covered once they're gone.

GM has already begun to fill some spots with employee-referred temporary workers at lower pay and no benefits. It is also shifting workers between plants as the company moves forward with a separate plan to close all or part of a dozen factories across the nation. And in the coming weeks, it will begin to reclaim 5,000 Delphi workers who will be assigned to other vacant jobs within the company.

The company's internal targets initially suggested that 20,000 workers would leave with the program. That figure assumed that a large portion of the 36,000 GM workers eligible to retire -- and some lower-seniority workers -- would jump at the chance to exit with money in their pockets.

Apparently, they have.

Late last week, United Auto Workers President Ron Gettelfinger said 25,000 GM workers had accepted offers, and another 8,500 had signed up at Delphi. The auto supplier, which was spun off from GM in 1999, was included in the program as part of a broader agreement in March with the UAW and GM as part of restructuring efforts at both companies.

Yet even those figures had been exceeded by the time of Gettelfinger's update, said the people familiar with the program. And there may still be a last-minute rush for the exits.

"People are waiting to the last minute to make up their minds," said Chris "Tiny" Sherwood, president of UAW Local 652, which represents workers at GM's Grand River Cadillac plant in Lansing.

Other UAW officials and workers predicted they will see a few last-minute takers, but not the big 11th-hour crowds once anticipated.

Under the program, UAW members at GM and Delphi with 30 years or more on the job can receive $35,000 to leave with full benefits and pension, while lower-seniority workers can receive lump-sum cash buyouts up to $140,000 to sever all ties with the company.

The offers were extended to all 113,000 of GM's U.S. factory workers and initially went only to 13,000 Delphi workers with 27 to 30 years on the job. But the Delphi program has since been expanded to cover nearly all workers at the company.

Some workers have already left under the program, while many are expected to leave July 1. But both companies reserve the right to keep workers on until Jan. 1, 2007.

You can reach Brett Clanton at (313) 222-2612 or


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