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Thousands of GM Workers Take Buyouts


And now a bit of good news for the struggling General Motors corporation, the world's largest auto maker. GM's workers are heading for the exit in droves. At least 28,000 have agreed to accept lump sum payments from the company to quit. GM says it needs to slash its labor force by 30,000 workers to become profitable again.

NPR's Frank Langfitt reports.


When GM began offering workers money to leave, no one was quite sure how many would take the deal. Depending on seniority, workers could receive anywhere from $35,000 to $140,000. But there was a catch. Some would have to give up the company's gold-plated healthcare and pension benefits. Analysts say the surprisingly strong response is a boost to GM's turnaround plan.

Ms. MARY ANN KELLER (Independent Auto Analyst and Author): I think net-net, this was very good program for GM.

LANGFITT: That's Mary Ann Keller, an independent auto analyst and author of a book on GM. She says that with so many workers leaving, the company should be able to significantly cut its labor costs, and its crippling healthcare expenses, which add about $1500 to the cost of each vehicle. Last year, General Motors lost more than $10 billion. It's too early to say whether the buyout attracted young and old alike, but Keller thinks some are leaving because they see more trouble ahead for GM.

Ms. KELLER: I think that as the news about General Motors evolved, I think it became more and more apparent to the employees that this is not a short-term phenomenon or problem at General Motors that was just going to go away.

LANGFITT: Analysts suspect that many of those who opted for the buyout are already eligible for retirement. That was the case at a United Auto Workers local in Lansing, Michigan. President Art Luna says that of the roughly 600 members who opted for the buyout, more than 500 had at least 30 years seniority. He says they see the $35,000 payout as a once in a lifetime deal. Luna says another group, which has just 10 or 12 years in, were eligible for the biggest payout and leapt at it.

Luna spoke on a cell phone from his car.

Mr. ART LUNA (President, United Autoworkers Local 602): They're looking at, wow, that's 140,000 that we can invest. Some of us are looking at wanting to open up things from daycare centers all the way to other things, like home inspection companies and stuff like that.

LANGFITT: Still others may be looking to get out before General Motors pushes through more concessions in next year's contract negotiations. Thousands of GM workers are in the company's jobs bank, where they earn full salary but don't actually build cars. Many analysts think GM will try to scrap the program.

Again, analyst Mary Ann Keller.

Ms. KELLER: If you're sitting in the job bank, you have to realize that that may go away in the 2007 bargaining, because no one should have the right to compensation without work. And that was an enormous expense for GM. So perhaps it was people in this group who recognized that the handwriting is on the wall for the job bank.

LANGFITT: Neither GM nor the United Auto Workers would comment on the buyout figures. They said they want to wait until next week when they have a full tally. Analysts say the buyout could save the company up to $3 billion a year.

Frank Langfitt, NPR News. Transcript provided by NPR, Copyright NPR.

Frank Langfitt
Frank Langfitt is NPR's London correspondent. He covers the UK and Ireland, as well as stories elsewhere in Europe.