DETROIT – About 35,000 hourly workers at General Motors Corp. have taken buyout or early retirement offers, surpassing the company’s expectations as it tries to cut costs by paring its hourly work force, GM Chairman and CEO Rick Wagoner said Monday.
The job cuts will help GM’s long-term turnaround plan as it cuts production capacity to match its current sales and market share. GM previously announced plans to cut its 113,000-person U.S. hourly work force by 30,000, closing 12 plants by 2008. GM said it now expects to reach its job reduction target by Jan. 1, 2007, about two years ahead of schedule.
“Over the past several months, we have accomplished a great deal in our strategy to reshape GM into a company that is more nimble, more global and built for long-term success,” Wagoner said in a statement.
The deadline for GM workers to file paperwork for the offers was Friday, but they have seven days to change their minds. Friday also was the deadline for workers at Delphi Corp., GM’s former parts operation that is now a separate company, to file for early retirement incentives.
Delphi said Monday that about 12,600 UAW-represented employees took one of the buyout or retirement offers at the automotive parts supplier, which filed for bankruptcy protection last October. Some Delphi workers also have an additional buyout offer on the table with deadlines that are more than a month away.
Based on preliminary numbers from GM, about 4,600 employees accepted buyouts and about 30,400 chose to retire. It is expected that most will retire or leave the company by the end of the year, GM said. Delphi did not break out how many workers took each option.
The nation’s largest automaker said it expects to save $5 billion in structural costs in 2006.
Because so many people are leaving, both GM and Delphi will have to scramble to keep plants and assembly lines running by recalling laid-off workers, bringing in transfers from other plants and hiring new people.
“There will be this challenge to make sure there are enough workers in certain locations. You can’t just move people around like chess pieces,” said Greg Gardner, spokesman for Harbour Consulting, a Troy, Mich., company that tracks manufacturing productivity.
Turnout was especially heavy at those plants targeted for closure or sale.
At a GM sport utility vehicle assembly plant in Oklahoma City that’s idled and slated to be shut down, the UAW local reported on its Web site that 1,426 workers – almost 60 percent of the 2,400-member local – accepted the offers. Another 377 will transfer to other plants.
Gerald Meyers, former chairman of American Motors Corp. who now teaches at the University of Michigan, said the cuts initially will cause problems, but eventually will be positive for both companies.
“It’s a manufacturing manager’s nightmare with all these people moving in and out,” said Meyers, who predicted quality problems for Delphi and to a lesser degree for GM, as the transition is made to a smaller work force. “It’ll take weeks before these people learn their jobs and before they find out how tired they’re going to get. It’ll show up in the quality of the product,” he said.
Analysts say they don’t have good estimates on how much all the buyouts and retirements will cost GM. But the company had about $21 billion in cash in March, said Robert Schulz, an industry analyst with Standard &Poor’s in New York.
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