International Herald Tribune
February 12, 2008
General Motors posted a record annual loss Tuesday and said it was offering a new round of buyouts to all 74,000 of its U.S. hourly workers who are represented by the United Auto Workers.
The automaker said it had a net loss of $38.7 billion in 2007, the largest ever by a U.S. automaker. The loss included a $38.3 billion tax-related charge taken in the third quarter.
GM also posted a fourth-quarter net loss of $722 million, compared with a net profit of $950 million a year earlier, reflecting a slump in North American sales and losses at its former finance subsidiary. Revenue in the quarter fell to $47.09 billion, from $50.8 billion.
GMAC, GM’s former financing arm, reported a fourth-quarter net loss of $724 million a week ago. GM sold GMAC to a group led by Cerberus Capital Management, but retained a 49 percent stake that still contributes to the automaker’s results.
GM said that its sweeping deal with the union would clear the way for it to hire lower-cost replacements.
The company, the No. 1 U.S. automaker, said those buyouts would start to generate savings by the second half of 2008.
Workers will be given the details of the buyouts over the next several weeks. Most of those who accept are expected to leave by July 1, the company said.
GM would not say how many workers it hoped to shed, but under its new union contract, it will be able to replace 16,000 workers doing nonassembly jobs with new employees who will be paid half the old wage of $28 per hour.
Ford Motor and Chrysler already have announced similar buyout offers.
GM had been offering buyouts to about 5,200 UAW workers at service and parts operations and some closed plants since December, but those workers now are eligible for the new, sweetened offer. It raises the incentive payments for retirement-eligible workers by $10,000 for production workers and $27,500 for skilled workers.
Retirement-eligible production workers will be offered $45,000 and skilled workers will be offered $62,500. They can retire with their full pension and health benefits. Those workers can take the money in a lump-sum payment or take it in the form of annual payments. They also can roll the money directly into a retirement account or 401k.
GM is giving less than Ford and Chrysler, which are offering up to $70,000 in lump-sum payments, but GM said its offer was comparable because workers who roll the money into a retirement account will not have to pay as much in taxes.
This article was posted: Tuesday, February 12, 2008 at 8:32 am