GM to pay out $400M to US workers

Associated Press

DETROIT

Less than two years after entering bankruptcy, General Motors will extend millions of dollars in bonuses to most of its 48,000 hourly workers as a reward for the company’s rapid turnaround after it was rescued by the government.

The payments, disclosed Monday in company documents, are similar to bonuses announced last week for white-collar employees. The bonuses to 76,000 American workers probably will total more than $400 million — an amount that suggests executives have increasing confidence in the automaker’s comeback.

In the four years leading up to its 2009 bankruptcy, GM piled up more than $80 billion in losses and was burdened by enormous debt and costly labor contracts.

“On the whole, we made tremendous progress last year,” CEO and Chairman Dan Akerson said Monday in an e-mail message to employees announcing the payments. “With our collective teamwork, this can be just the beginning.”

The company made $4.2 billion in the first nine months of 2010 and is expected to announce a fourth-quarter profit soon.

Most of GM’s hourly workers will get a record payment of more than $4,000 — more than double the previous record in 1999, at the height of the boom in sport-utility vehicles and pickup trucks. Nearly all 28,000 white-collar workers such as engineers and managers will get 4 percent to 16 percent of their base pay. A few — less than 1 percent — will get 50 percent or more.

Bill Selesky, an auto- industry analyst with Argus Research in New York, called the recovery “dramatic” and said the payments were needed to stop talent from jumping to other automakers, especially crosstown rival Ford.

The company, he added, also is trying to send a message: “It’s the new GM.”

But the bonuses drew criticism from an opponent of the auto-industry bailout in Washington who said GM should repay its entire $49.5 billion loan before offering bonuses.

“Since the taxpayers helped these companies out of bankruptcy, the taxpayers should be repaid before bonuses go out,” said Republican Sen. Charles Grassley of Iowa. “It sends a message that those in charge take shareholders, in this case the taxpayers, for a sucker.”

The government has been repaid $23 billion but needs $26.4 billion more to recoup its whole invest- ment. The government still owns 500 million shares of GM common stock, which would have to sell for roughly $53 per share to get all the money back.

The GM documents show that the company plans to pay hourly workers at least $189 million in bonuses next month.

About 45,000 workers at GM factories will get more than $4,000 each. An additional 3,000 workers at old parts-plants that GM is trying to sell will get $3,000 each.

The company would not say how much the white-collar bonuses will cost, but calculations made by The Associated Press show the total will probably top $200 million.