Chrysler offers buyouts to 13,000 in Detroit area

January 29, 2008

BY TIM HIGGINS

FREE PRESS BUSINESS WRITER

Chrysler LLC offered buyout and early retirement packages Monday to about 13,000 Detroit-area hourly UAW members as the automaker works to cut its overall hourly workforce by as many as 10,000 people.

Monday's effort aims primarily to reduce workers at support facilities that are seeing the domino effect of recent production cuts at the automaker's assembly plants.

Packages offering lump-sum payments as high as $100,000 were offered to UAW workers at the Sterling Heights and Warren stamping plants, the Trenton and Mack Avenue engine plants, Conner Avenue Assembly Plant, Detroit Axle, Mt. Elliott Tool and Die, and the Sterling Heights Vehicle Test Center, Chrysler spokeswoman Michele Tinson said.

In addition, she said, the 1,140-person second shift at Sterling Heights Assembly Plant was offered packages, and 770 hourly workers at Warren Truck Plant, which is idle this week, are expected to be offered buyouts, too.

Also, 110 salaried UAW members at the company's Auburn Hills technology center and elsewhere will be able to take early retirement effective Thursday.

About 500 workers at Jefferson North Assembly Plant already had a chance to show interest in a buyout package this month, Tinson said.

Outside the Detroit area, workers at assembly plants in Belvidere, Ill., St. Louis and Toledo already faced deadlines to express interest in buyout packages that were offered.

Chrysler had said it wants to eliminate about 900 jobs at the Jefferson facility in Detroit, 780 jobs at the Toledo North plant and 1,096 jobs at the Belvidere factory.

"That seems to be on plan," Aaron Bragman, an analyst at Global Insight, said of Monday's announcement. "This is reducing headcount so they can get costs down."

Of the packages offered Monday, an estimated 4,600 are early-retirement eligible. The early-retirement package includes a lump sum of $70,000. The $100,000 buyout package is for eligible employees with at least one year of service. The deadline is Feb. 18.

Chrysler negotiated the packages with the UAW, which did not want to make a comment Monday. Tinson said the job cuts are related to volume reductions.

Monday's offers seemed to focus on facilities that do so-called noncore work. Under the new UAW contracts with Chrysler, non-assembly workers can be replaced by new hires whose pay and benefits cost half as much as those for current assembly workers. But Chrysler has indicated that the current cuts are solely related to cutting capacity to meet falling consumer demand.

Chrysler is not alone in Detroit in its efforts to reduce its workforce. Ford Motor Co. has started rolling out buyout offers. GM has only begun the first phase of its program and aims to offer packages to the rest of its UAW workforce next month.

Some analysts wonder whether Chrysler will have a greater challenge getting workers to take buyouts because its workforce is younger than GM's.

The average age of Chrysler's UAW hourly workers is 46 with 30% of workforce eligible for retirement within five years, according to research by Sean McAlinden, vice president of research at the Center for Automotive Research in Ann Arbor.

Meanwhile, 64% of GM's workforce is within five years of being eligible to retire; the workforce's average age is 49.

"They're young and looking around going, 'There's nothing else in this market. I can't necessarily leave because the housing market is so awful,' " Bragman said of Chrysler workers. "It is still a difficult decision to actually leave the company -- $100,000 notwithstanding."

The UAW told its members in October that Chrysler plans to close the Conner Avenue Assembly Plant in Detroit some time over the next four years. The Detroit Axle plant is slated to close after the new Marysville axle facility comes online; the union has said UAW members will have the right to transfer to the new facility.

In November, Chrysler announced plans to eliminate as many as 10,000 hourly jobs on top of the 11,000 hourly jobs planned for elimination as part of the February 2007 turnaround plan.