General Motors on Tuesday reported a $38.7 billion loss for 2007, its largest ever, and said it would offer its unionized workers a fresh...
General Motors on Tuesday reported a $38.7 billion loss for 2007, its largest ever, and said it would offer its unionized workers a fresh round of buyouts meant to remove more high-cost veteran employees from its payroll.
GM, essentially tied with Toyota after nearly 80 years as the world’s top automaker, coaxed about 30,000 workers into leaving the company in 2006 through a combination of early-retirement incentives and buyouts.
Company officials did not disclose how many employees they hope will accept the company’s latest offer and either quit or retire early.
GM has about 74,000 unionized employees eligible for the program.
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United Auto Workers (UAW) President Ron Gettelfinger said, however, he thought the number would be fewer than 20,000.
The company’s latest buyout offer, he said, was expected and in keeping with a landmark labor contract that the union and company struck last year.
“We didn’t go into the contract blind,” Gettelfinger said Tuesday, according to The Associated Press. “There are certain things we cannot control.”
In a statement, GM Chief Executive Richard Wagoner said the buyout “will help us transform the work force” and bring U.S. labor costs more in line with world standards.
Wagoner said that despite the losses, the company’s turnaround plan remained on track, with record sales in Europe, Africa and Latin America helping offset a weakening U.S. economy. GM sells 60 percent of its vehicles overseas.
The buyouts, coupled with last year’s labor agreement, aim to reduce the steep labor bill that GM executives say keeps the company from competing with Asian manufacturers.
Although GM trimmed $9 billion in expenses in 2007, it is still losing money. The automaker posted a fourth-quarter net loss of $722 million.
Ford has gone through a similar restructuring. Chrysler, meanwhile, was bought by a private-equity firm.
The buyout program will be available to all of GM’s 74,000 UAW employees, a figure reduced by about 30 percent in the past two years.
Under the program, veteran employees eligible for or nearing retirement will be offered payments of as much as $62,500 to retire early. Those who are not eligible to retire can receive payments of between $70,000 and $140,000, depending on their length of service, “to voluntarily quit and sever all ties with GM.”
In addition to losses on the automotive side, the company was buffeted by the mortgage crisis that has disrupted the global financial industry, with its GMAC financial subsidiary reporting a loss of $2.3 billion.
GM shares dropped 52 cents Tuesday to close at $26.60.