Auto workers worry buyout won't go far

GM, Chrysler & Ford logos

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Kai Ryssdal: Whether or not we're actually in a recession yet is still anybody's guess, but Nissan CEO Carlos Ghosn said today Detroit's already there. Ghosn runs Renault, too, so you've got to figure he knows what he's talking about. On the bright side, he did say he thinks whatever recession the U.S. auto industry is in will be a short one.

As they try to turn themselves around, all three American carmakers have offered buyouts to virtually every hourly worker they have: $100,000 to just walk away.

Sounds tempting, but Dustin Dwyer reports from Michigan Radio, it's more complicated when you're not sure what comes next.


Dustin Dwyer: Steve Maniaci has assembled engines for Chrysler for 10 years. He was one of 14,000 employees Chrysler offered buyouts to, but like a lot of his co-workers, he turned it down.

Talking outside a convenience store near his plant on Detroit's east side, Maniaci says his reasons were mostly economic. For one thing, $100,000 doesn't go as far as it used to, particularly once you factor in taxes:

Steve Maniaci: If they offer you a $100,000 buyout package, you're probably going to get about $65,000 cash to do something with it -- to make a move -- and if you don't make a move, you try to live on that money, it'll be spent in a year, very easily.

Another problem is Maniaci wasn't sure he could get another job in Michigan's depressed economy. He considered jobs in other states further south where the auto industry is actually expanding, but then he'd have to figure out how to sell his house.

Maniaci: I have three houses on my block that are in foreclosure. There's houses for sale all over where I live and nothing's selling right now. They've been on the market for almost two years. It's just... the market's crashed.

There's a bit of a catch-22 here. Maniaci essentially couldn't accept the buyout from Chrysler because Michigan's economy is so lousy, and that's largely because of the struggling auto industry.

But the automakers say they need the buyouts to get back on track and stem the flow of red ink pouring out of their North American operations.

The deadline for most Chrysler's buyouts was Monday, but the company says it won't announce the number of people who took the offer for several weeks. In the meantime, Ford and GM are still dangling their offers to nearly 130,000 employees.

The goal is to convince workers with fixed pay and benefits to leave and then replace them with new workers that'll make about half as much money. That new tier of lower paid employees was a key provision of labor contracts signed by all three automakers last year.

Steve Burgess has worked at Ford for 34 years and is eligible for retirement. He's exactly the kind of employee Ford hopes will take the buyout, but Burgess isn't interested:

Steve Burgess: I'm just not ready. I'm 55 years old, good health. Why have to wait on a check when I can work everyday?

Talking outside Ford's Rawsonville plant on his lunch break, Burgess says if he left now, he'd get a pension check every month and keep his health care coverage. He'd also receive a $35,000 retirement bonus, but Burgess says his hourly wages, boosted by as much overtime as he can get, earn him about $100,000 a year -- and that's tough to give up.

That seems to be the attitude of a lot of people in his plant and that could be bad news for Ford.

Michael Robinet is an auto industry analyst for CSM Worldwide. He says even if most workers turn down the buyout offer, Ford, GM and Chrysler could still see savings.

Michael Robinet: I don't know if they're going to get everything that they're looking for, but what I do think is they're going to get some performance out of this. There's not just a couple of hundred of people that are going to take these.

This is the second time the automakers have offered widespread buyouts since 2006. More than 80,000 workers left in the last round. Robinet expects the numbers to be lower this time. He says more buyout offers could be on the way in the years to come.

But Steve Burgess at Ford says he won't be waiting around for a bag of cash to decide when he should retire.

Burgess: I'll work for my money. I don't want no handout. When I'm ready to go, then I'll go.

In Ann Arbor, Michigan, I'm Dustin Dwyer for Marketplace.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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