Agree on early outs Up to 10,000 may take offer

UAW, GM

December 15, 1992|By New York Times News Service

DETROIT -- The United Automobile Workers union, signaling that it recognizes the gravity of the problems confronting General Motors Corp., agreed yesterday to a set of sweeping early-retirement incentives for hourly workers.

The incentives come as the No. 1 automaker is feverishly cutting costs, closing plants and shrinking itself overall to regain its financial health. The company has announced plans to close nearly two dozen car- and parts-making plants over the next several years and eliminate more than 70,000 jobs, the bulk of which are held by union members.

It was not immediately clear how many GM factory workers would elect to retire early, but the package of incentives is one way the automaker hopes to shrink its hourly work force about 13 percent, to around 250,000 employees by 1995, from 288,000 currently. In 1990, the last time the company offered early-retirement incentives to blue-collar employees, about 7,000 hourly workers accepted a different plan.

GM has more than 37,000 workers on layoff, but only older workers with at least 10 years of seniority may qualify for the incentives, and eligibility will depend on which group of idled workers GM puts them in.

Officially, the company declined to say how many workers were eligible for the early retirement, but financial analysts said they were told by the company that between 5,000 and 10,000 workers were expected to take the offer.

GM employs about 3,400 workers at its plant on Broening Highway, which makes the Chevrolet Safari and GMC Astro vans.

The latest incentives will be financed with as much as $450 million of a $600 million fund previously set aside by GM and the union for training programs. The spending will not require a new charge to the company's earnings.

The agreement is a small but positive sign that relations are amiable between John F. "Jack" Smith Jr., GM's president and chief executive who took over in early November, and Stephen Yokich, a vice president of the union who is its chief negotiator with General Motors.

Last summer, GM endured a series of local labor walkouts, raising doubts whether the leadership of the automaker and the union were on good terms as the two sides wrestled with GM's problems and approached negotiations for a new labor contract next summer.

The agreement to pay GM workers to retire early -- and the union's acceptance of the terms -- tacitly acknowledges that the automaker believes it cannot afford the $3 billion of job-security benefits it negotiated with the union in the 1990 contract.

With that accord, negotiated under the supervision of Robert C. Stempel, then chairman and chief executive, GM workers in effect were promised they would receive almost full salary whether or not there was work for them.

But financial disaster struck GM's North American operations as the automaker piled up more than $12 billion in pretax losses because of weak demand for vehicles, a falling share of the market and enormous labor and other costs.

Mr. Stempel, who one year ago announced the closing of almost two dozen plants and a plan to eliminate more than 70,000 jobs, resigned under fire in late October.

One group eligible for incentives consists of GM workers 62 or older, who are scheduled to retire in the spring. Each retiring worker would receive full pension and health-care benefits, plus a $10,000 voucher toward the purchase of a new GM car and $3,000 cash.

The second group eligible comprises workers age 50 to 61 with 10 or more years of service. They would receive full pension benefits but no voucher for a new car. They would, however, be allowed to earn as much as they could at other jobs without facing the reduction in their pension that the current contract specifies for retirees who get such income. The older workers would have to contend with such an income restriction.

Yesterday's agreement covers active workers, including about 7,000 on temporary layoff at plants where production has been temporarily halted because of slow sales or for retooling or for some other reason.

Also eligible are about 20,500 workers in a "jobs bank," people whose last job has been eliminated and are biding their time by doing community service or working in nonautomotive jobs but drawing full pay from GM.

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