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GM says a quarter of hourly U.S. workers to take buyouts

Many of the 19,000 exiting will be replaced with cheaper hires. The carmaker could save $2.1 billion a year.

May 30, 2008|From the Associated Press

DETROIT — General Motors Corp. said Thursday that a quarter of its U.S. hourly workers would take the company's latest buyout and early retirement offers, opening the door for new hires who will make less money.

The automaker said 19,000 workers had agreed to take the buyout offers and leave the company by July 1. GM offered buyouts to all 74,000 of its U.S. hourly workers in February.

GM never said how many workers it hoped would take the buyouts, but under a labor agreement with the United Auto Workers union reached in the fall, GM may hire as many as 16,000 non-assembly workers at half the old wage of $28 an hour. GM said it would fill job openings with current employees wherever possible but also would hire new workers.

Troy Clarke, GM's president for North America, said the company was trying to reshape its business in a challenging U.S. market, which has seen a steep drop in auto sales because of high gas prices and the weak economy.

"This attrition program gives us an opportunity to restructure our U.S. workforce through the entry-level wage and benefit structure for new hourly employees," he said.

Under the program, retirement-eligible workers were offered financial incentives to leave with full pension and other benefits, and workers who were within four years of their 30th anniversary with the company were allowed to retire early and get reduced pay until their benefits kicked in. Workers could also take as much as $140,000 to leave the company with no ties, including pension or health benefits.

GM spokesman Dan Flores wouldn't say how many workers took early retirement and how many took buyouts. He said the company would reveal the cost of the buyouts at a later date.

Himanshu Patel, an auto analyst with JPMorgan Securities, said GM's acceptance rate on the buyouts was better than expected. He predicted GM wouldn't replace as many as 15,000 of the departing workers and would hire 4,000 for total annual savings of $2.1 billion.

Detroit-based GM conducted its last round of buyouts in 2006, when 34,410 workers left. GM had 113,000 U.S. hourly workers when it began the 2006 buyouts.

GM shares rose 23 cents to $17.38 on Thursday.

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