Chrysler's offer went out to all hourly workers represented by the United Auto Workers union (Detroit), except for those at the Kenosha, Wis., engine plant. Chrysler's early retirement package includes $50,000 cash and a $25,000 voucher to purchase a new car. The buyout offer includes $75,000 cash and a $25,000 voucher to purchase a new car. For those employees with 10 years or more seniority at the closed St. Louis, Mo., and Newark, Del., plants, the buyout offer is slightly more attractive, including $115,000 in cash and the $25,000 car voucher.GM's offer is not as lucrative to employees. GM is offering $20,000 cash and a $25,000 voucher for the purchase of a new car to all workers who retire early during the specified time period. In the past, GM has offered between $45,000 and $62,500 to workers who chose to retire early and $140,000 to employees who left the company and were willing to give up post-retirement healthcare coverage. GM offered the higher money deal to all hourly employees in 2008 and had 19,000 workers leave the company. With such a small offer of cash being made in this round of cuts, many feel that the offer is insulting, and the response may be limited. Both companies have set February 25 as the final day employees can accept the offers.
Ford Motor Company (Dearborn, Mich.) has stated that it has no plans to make similar offers to hourly employees at this time. Ford offered 10 early retirement and buyout packages to employees during the first quarter of 2008 and offered select packages again in the third quarter at specific plants. More than 7,000 hourly employees accepted those rounds of offers last year.
GM received $9.4 billion in federal bailout money in December as the first part of the overall bailout plan offered to the automakers. Chrysler received $4 billion at the same time. Both automakers, as well as Ford, have until February 17 to submit plans outlining their respective returns to viability. Once these plans are submitted to Congress, GM will receive an additional $4 billion in bailout funding, and Chrysler will receive $3 billion. Ford, which is operating off of loans received in previous years from private lenders, has stated the company will not need federal funds to survive, but may need a $9 billion line of available credit in the future. GM and Chrysler must have their plans reviewed and approved by March 31, or they will be forced to repay the entire loan amount plus interest immediately.
As sales continue to slide not only for the Detroit Three, but also for foreign automakers, the viability of the American auto sector is still in doubt. Hopefully, the Detroit Three have formulated detailed, logical plans for restructuring that Congress can approve in short order. However, given the history of wasteful spending, illogical models and poor management decisions, the road to recovery for GM, Chrysler and Ford could very well be a long and painful one, at the end of which one of these bastions of American industry may cease to exist.
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