GM Attrition Could ‘Quickly’ Reshape Workforce
By James M. Amend WardsAuto.com, Jan 15, 2008 11:27 AM

DETROIT – General Motors Corp. executives say a 2-part attrition program this year could help the auto maker rapidly reduce its labor costs, but it won’t offer any concrete retirement numbers until later this year.

“It can happen quite quickly,” GM Chairman and CEO Rick Wagoner says of the planned workforce turnover. “We just need to clear out the positions.”

The auto maker last month offered 5,200 United Auto Workers members at select sites retirement incentives, a move stemming from a new collective bargaining agreement reached in October.

GM will conduct a second round of buyouts in the coming weeks, Wagoner says, for which all other UAW-represented employees will be eligible.

He declines to offer any attrition target and notes the first phase mostly includes sites with higher numbers of participants in its JOBS Bank, a program GM created in the 1980s to provide retraining and alternative work assignments to union employees replaced by automation.

He also warns that even if upwards of 2,000 workers take the first-phase buyout, that number is relatively small against GM’s 72,000 active UAW employees.

“Stay tuned for the second phase,” he tells journalists at the North American International Auto Show here.

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GM’s UAW workforce was expected to learn details of the first-phase offer after the holiday shutdown. The auto maker does not elaborate, but says it features elements similar to an attrition program conducted in 2006 that included lump-sum payouts of up to $140,000, without health-care benefits.

GM says 34,410 workers, or about one-third of its hourly workforce at the time, accepted some type of buyout as part of the program.

The latest attrition program will clear the way for GM to hire employees for roughly $14 an hour, or about half what GM presently pays.

Experts considered the 2-tier wage concession a key victory for the auto maker in its new contract with the UAW that will bring its labor costs more closely in line with competitors such as Toyota Motor Corp.

GM has said it could turn over 75% of its entire hourly workforce through attrition programs and natural retirement before the expiration of the new labor agreement.

“It’s a voluntary program, so people will have to want to (retire),” Wagoner adds, calling the scope of the attrition “something we need to work through with the UAW.”

But whatever employee turnover the attrition program might yield, GM onsiders the new health-care trust it negotiated with the union its greatest opportunity to reduce labor costs and increase profitability in its struggling home market.

GM North America President Troy Clarke anticipates saving $3 billion annually beginning in 2010, when the company shifts retiree health-care responsibility to the UAW in the form of a Voluntary Employee Benefits Admin. (VEBA).

“That’s a huge expense for us,” Clarke says of GM’s annual retiree health-care tab. “Billions of dollars a year, basically, will be taken off the books.”

The VEBA still faces court approval.

jamend@wardsauto.com