GM hiring up in the air

GM’s second buyout plan in two years could be announced this week.

By DON SHILLING

VINDICATOR BUSINESS EDITOR

General Motors likely will face a decision soon: Should it hire more workers for its Lordstown complex or make do with a smaller work force?The decision is coming because of a buyout and retirement program that GM and the United Auto Workers are crafting.

A deal could be announced this week, Rick Wagoner, GM chief executive, said at an auto show in Detroit.

GM hopes cash payments and early-retirement incentives will lure thousands of workers to leave the company or retire, so that it can replace them with lower-paid workers. A labor contract reached last fall allows GM to bring in new workers at half the pay and lower benefits than current workers.

Dan Flores, a GM spokesman, said 21,000 of GM’s 72,000 UAW-represented workers have 30 or more years of service. He said he couldn’t project how many would retire or take cash buyouts.

Officials of UAW Local 1112 in Lordstown did not return calls seeking comment.

In 2006, an attrition program coaxed 35,000 union workers nationwide to retire or quit. At Lordstown, 1,600 workers at the assembly and fabricating plants accepted the offers, so GM eliminated the midnight shift at the complex.

What will happen this time? Will GM trim staff again, bring in lower-paid workers or a combination of both?

Flores said he couldn’t speculate on those questions. He noted, however, that previous attrition programs did not require GM to replace workers who left.

Recent comments by an industry analyst in Michigan call into question whether GM would replace workers who leave Lordstown this year.

Sean McAlinden, vice president for research for the Center for Automotive Research, said he expects the work force in Lordstown to be greatly reduced when new models are introduced there in 2009 and 2010. He expects staffing to fall from 3,400 to roughly 2,200.

Nationwide, however, McAlinden expects GM to hire about 28,900 workers over the next four years.

These workers are expected to be hired into “non-core” jobs at plants, which pay less under the new labor contract. These are jobs that are not tied to the assembly line, such as janitorial work or transferring parts.

The hourly pay will be between $14 and $16, compared with $28 for existing workers.

By 2011, McAlinden estimates that 43,400 of GM’s current workers will be on the job receiving top pay and benefits, while about 28,900 new hires will be added.

McAlinden estimated that in four years about 20,000 of the new hires still will be in “non-core” jobs earning lower pay.

The rest will have moved up to assembly line jobs.

There, they will earn the same pay, but not the same benefits, as current workers.

One benefit change comes in pensions.

The new labor contract eliminates the traditional pension plan for new workers.

Current workers with 30 years of service retire with an average pension of $3,100 a month.

For new workers, GM is switching to what’s known as a cash-balance plan.

GM will contribute an amount equal to 6.4 percent of workers’ pay into a retirement account, and the rate of return will be tied to the interest paid on Treasury bonds.

Also, new hires will not receive company-paid health insurance when they retire as current workers do. Instead, GM will contribute $1 per hour worked into a 401(k) plan, and that money could be used to pay for health care upon retirement.

In December, GM announced a buyout plan for 5,200 of its hourly workers, most of whom are at plants that are closing or have closed.

It called this plan Phase 1 in anticipation of a company-wide buyout.

Terms haven’t been disclosed, but GM has said they are similar to the 2006 attrition plan.

shilling@vindy.com