GM Says 7,500 UAW Members to Take Buyouts, Boosting Savings Bid

March 26 (Bloomberg) -- General Motors Corp. said 7,500 United Auto Workers members have signed up for buyouts the company needs as part of cuts to keep $13.4 billion in U.S. aid and more than doubling a Barclays Capital estimate.

The retirements and buyouts open slots for the biggest U.S. automaker to hire replacement workers for half the current union rate. Under the federal loans GM says it needs to survive, labor costs must match those of Japanese automakers in the U.S.

GM and Chrysler LLC are encouraging workers to accept buyouts, retire or quit after concessions this year eliminated benefits related to job security and unemployment pay. They’re seeking as much as much as $21.6 billion in new U.S. financing to stay in business.

President Barack Obama’s auto task force will announce more aid for GM and Chrysler within a week, possibly in a few days, Senator Carl Levin said yesterday.

“It’s clear that there will be more support and it will be with some conditionalities, which will be made clear within a week,” Levin, a Michigan Democrat, told reporters in Washington.

Steven Rattner, the U.S. Treasury’s chief auto adviser, said March 20 the task force would give a “sense of direction” before the end of the month. March 31 is the automakers’ deadline to show they can restructure and remain viable.

‘Clear Direction’

“It’s something that will be positive,” Levin said of the task force’s planned announcement. “The administration wants to be helpful. It is clear to me that there will be conditions and that there will be clear direction as to where they’re headed.”

GM’s union buyout covers about 62,000 employees willing to retire or quit and consists of a $25,000 voucher to buy a new auto and receive $20,000 in cash. The company’s goal is to get half of about 22,000 eligible workers to leave and GM budgeted for about 6,000 to take the current offer, a person familiar with the plans said.

Workers who accepted the buyout by the March 24 deadline have seven days to reconsider. The UAW declined comment on the offers before today’s release.

Barclays analyst Brian Johnson in Chicago projected in a March 12 report that GM would persuade about 3,100 workers to leave. GM, Ford Motor Co. and Chrysler cut more than 124,800 hourly workers with buyouts or attrition in three years.

Ford’s Buyouts

Union workers at Ford, which isn’t seeking government loans, ratified changes March 9 after reaching an accord on a plan to replace as much as half of future payments to a UAW-run retiree health-care fund with stock instead of cash. GM and Chrysler are still negotiating retiree-fund changes.

The Ford UAW concessions eliminate the so-called jobs bank that paid workers most of their wages to report to a work location when there were no duties to perform. Pay that supplements unemployment has been reduced. Laid-off employees who refuse to take a new job, even hundreds of miles away, lose their benefits.

Ford’s buyout program, which pays as much as $75,000 in cash and vouchers, begins April 1 and ends May 22. The program may be accepted by 5 percent, or about 2,100, of Ford’s current 42,000 UAW members, Johnson wrote.

Chrysler may shed about 3,000 workers in a buyout, people familiar with that program said this week. The deadline for acceptances, originally set for tomorrow, has been extended indefinitely because new contract language with the UAW isn’t complete, company spokesman Max Gates said today.

Chrysler’s Package

Cerberus Capital Management LP’s Chrysler is offering cash and a vehicle voucher with a combined value of as much as $75,000 to its 28,600 UAW workers. The Auburn Hills, Michigan- based automaker granted buyouts of as much as $100,000 last year, when 13,200 union workers left.

GM started the first of its announced plans for 10,000 salaried-worker cuts March 24, eliminating 160 mechanical engineering jobs in Michigan, spokesman Tom Wilkinson said. The automaker has a May 1 deadline to complete the reductions, which include 3,400 U.S. employees.

The company got 34,400 union members to leave in 2006 with packages of as much as $140,000, and used pension funds to help pay as much as $62,500 for 18,000 UAW members to depart in 2008.