The Freep reports that GM will not be offering the customary buyout offers to its white-collar employees as it seeks to cut its salaried ranks by double digit percentages. Huh? The General’s offering its UAW workers $20k and a $25k car voucher to bugger off. Turns out GM’s bailout agreement with the government prohibits the ailing automaker from using GM’s pension fund to pay for those kiss-off packages– as it has done in the past. Specifically, the loan states that “the prohibitions on benefit increases under this covenant include… a prohibition on the creation or… payment of any obligations associated with any plant shutdowns, permanent layoffs, attrition programs or other workforce-reduction programs after the effective date.” And guess what? With the pension fund piggy bank cut off, there’s nowhere else to get the money!
The Freep says that’s why the current UAW buyout offer is so much worse than the $100k+ packages of the past. As UAW workers are contractually guaranteed work through the end of the contract period, GM is still willing to dip into its (dwindling) operating cash to buy them out. White collar workers, on the other hand, meh. They can just be fired.
So that’s what’s happening. In fact, GM has even reduced severance pay for its hapless managers (gee, these guys should unionize) from the traditional one month salary per year served.
I don’t know any GM Managers so I could be real off base here, but after the previous 5 waves of non-bargining unit – ie ‘managers’ layoffs – who is left? Just the Dead Enders?
I’ve worked in aerspace for years and the first thing they teach you that you always want to be the first one out the door – because the packages never get better, only worse.
One WEEK salary per year served is the norm in private-sector industries I’ve worked in.
If GM salaried employees have typically been offered a MONTH’s salary, they should have taken MikeInCanada’s advice.
Welcome to the real private sector…
I’ve worked in aerspace for years and the first thing they teach you that you always want to be the first one out the door – because the packages never get better, only worse.
It is the same in high tech companies. The packages get progressively worse with every round of layoffs. As the end nears people look the other way as laptops, office equipment, and anything of value that will not be needed with smaller number of employees disappears as RIFed employees make their own packages with whatever they can slip away with. Meanwhile, the morale of those “lucky” enough to survive the current round plummets, employees spend their time kibitzing about the stupidity of upper management, and not much work gets done for months. Just when everyone has gotten over the shock, adjusted to new number of employees, and started to do real work, there is another round of layoffs. The end result is that the business becomes largely disfunctional, which causes more layoffs.
At pretty much everywhere I have worked the standard package is a base of four weeks plus a week for every year served. Since job hopping is so common, the week/year never adds up to much. The best thing that can happen is the percentage of employees RIFed being high enough to trigger the WARN act, in which case companies will give 60 days severance instead of 60 days notice.
Early and small layoffs may use a higher base, like six or eight weeks.
I knew an HR manager for a small, downsizing firm. After finishing a round of layoffs she went to the CEO and said she had finished with all the layoff stuff. The CEO’s reply: “Well, actually, there is just one more.” Sad.
The last wide-scale ‘voluntary’ offers I know of at GM were in 2004 in sales & marketing. They learned their lesson from that one…pretty much all of the good people took it – leaving them with dead-enders and ad-agency support.
Since then, they have been ‘targeted’ at low performers and those in teh retirement window (55+). What’s amazing is just how many old people were still working at GM…..
I wonder where Chrysler is getting the cash for the new round of hourly buy-outs over there?
$75k cash
$25k voucher for new car
$15k to cover taxes on voucher
6 months of healthcare
Accrued pension can be tapped at 65
Employee discount for 1 year
Is this tapped from the pension fund?
Do they figure the company is toast anyway so why not throw some cash at anyone smart enough to take it?
No surprise here. Gotta get while the gettin’s good.
well if the government is going to trim salaries of executives the little guys are going to pay for it too. The law of unintended consequences.
When GM announced their Pension Buyout Plan on June 1, July 20 seemed far enough away. Now that we’re in July, that decision deadline might be feeling a little too close for comfort. Understanding the consequences of the three decisions available to select retirees is a lot of work. In fact, you may have found the phrases and terms require some sort of degree to fully understand. It’s okay to be feeling this way; that’s exactly why seeking the advice of a professional financial planner has been encouraged. The planners at LJPR, LLC of Troy, MI have years of experience assisting retirees like you navigate the muddy waters of pension plan decisions. They have created an informative video specific to the GM pension buyout options as a service to all GM retirees. You can watch it by clicking http://youtu.be/32ZRne7AoTQ. You still have time to make an educated decision about your role in the GM Pension Buyout Plan.