Chrysler Offering Buyouts to More Hourly Employees

By Nick Bunkley
The New York Times

Tuesday 29 January 2008

Detroit - Chrysler offered buyouts of as much as $100,000 to most of its hourly workers in the Detroit area Monday as part of its plan to cut as many as 10,000 more jobs.

The program means that nearly all hourly automotive workers in Michigan now have the option to leave their job this year. Earlier this month, the Ford Motor Company began a second round of companywide buyouts and General Motors extended buyout offers to about half of its work force.

None of the automakers have said how many workers they expect to take the buyouts, but they plan to replace some departing workers with new hires earning about half the salary of their predecessors. That is allowed under a two-tier wage provision in the contract that the companies signed last year with the United Automobile Workers union.

Anyone who has been with Chrysler for at least one year can elect to take a lump-sum payment of $100,000 in exchange for giving up health care and most retirement benefits. Workers who are eligible to retire - about 4,600 of Chrysler's 12,000 U.A.W.-represented workers in the Detroit area fall into that category - can take a payment of $70,000 and retain lifetime health care coverage.

Chrysler made similar offers available a year ago, when it said it needed to cut 13,000 jobs. As of last June, 6,400 workers had taken a deal, but the company has not provided an updated figure since it was sold to the private equity firm Cerberus Capital Management.

In November, five days after signing a four-year labor agreement with the U.A.W., Chrysler's new chief executive, Robert L. Nardelli, said the company needed to cut 8,500 to 10,000 more jobs.

Workers at nine Detroit-area Chrysler factories, including metal stamping, engine and small assembly plants, were given buyout offers Monday and have until Feb. 18 to apply for one, said a company spokeswoman, Michele Tinson. Workers at two big assembly plants have already been considering offers, and those at a third assembly plant may get similar offers soon. Chrysler recently offered buyouts to workers in Belvidere, Ill., and Toledo, Ohio, Ms. Tinson said.

"We'll work closely with the U.A.W. to determine any further special program offerings around the country," she said.

Last week, the president of the U.A.W., Ron Gettelfinger, said he supported the new rounds of buyouts, but he would not project how many workers would take the deals. "Whether it works for a particular individual is up to them," he said.

He expressed confidence in the futures of the carmakers, particularly Ford, which is viewed as being in the worst shape of the three, as they continue to shrink and cut costs.

"A lot of people, especially when it comes to Ford, are not very optimistic, but I am," Mr. Gettelfinger said. "We want to move that company forward and we feel like they're in a position to do that."

Assembly workers at the Detroit automakers earn about $28 an hour. Newly hired workers can be paid as little as $14 an hour under the contracts signed last fall, meaning that each worker who is replaced by someone earning the second-tier wage saves the company nearly $30,000 annually in salary, as well as thousands of dollars from reduced benefits.

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