Lining up to take buyouts

John Dimsdale Jun 23, 2006

KAI RYSSDAL: Today’s a big day for about 140,000 auto workers around the country. Midnight’s the deadline for their final answer on an early retirement offer. General Motors and parts maker Delphi have dangled buyout packages worth between $35,000 and $140,000 per worker. It’s one of the biggest buyout offers in corporate history. And a key part of GM’s plan to get back on track.

We won’t know until next week exactly how many will choose to get their gold watches early. But either way, Marketplace’s John Dimsdale reports, the implications aren’t so good for their union.

JOHN DIMSDALE: Throw in similar offers from Ford and analysts expect 50,000 or more workers will take the money and run. That’s nearly 10 percent of the United Auto Workers membership. The union could lose more than $30 million in annual dues.

But Nelson Lichtenstein at the University of California’s Center for Work, Labor and Democracy, says many workers at domestic car companies know the future is bleak.

NELSON LICHTENSTEIN: If they’re reading the newspaper and they can see that the prospects for the companies for which they work are not golden, they might say take a bird in the hand rather than two in the bush. Clearly the companies have indicated they want to cut back, cut back, cut back.

For the Big Three American automakers, the buyouts will result in a younger, smaller workforce. Industry analyst Rebecca Lindland at Global Insight says that’s a crucial step to help them get out from under what she calls archaic labor rules.

REBECCA LINDLAND If GM or Ford closes a factory, they still have to pay the workers 95 percent of their pay. So it doesn’t really have a positive impact on their bottom line when they close factories. Meanwhile, Honda, Toyota, Nissan, Hyundai, Kia, they continue to forge ahead without these types of constraints.

Thinning membership comes at a bad time for the UAW, which begins negotiations on a new contract with Detroit’s carmakers next year. To prepare for the looming battle, members voted last week to transfer $60 million from the union’s strike fund to beef up its organizing and public relations efforts.

In Washington, I’m John Dimsdale for Marketplace.

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