Traverse City Record-Eagle

Michigan

November 19, 2008

GM: Labor costs competitive

(Continued)

GM, which has been restructuring for about five years, had about 125,000 U.S. hourly employees in 2003 and expects to have 62,500 by the end of this year.

Critics note that when Detroit automakers try to downsize, they either have to pay workers to stay in the jobs bank or give them buyout or early retirement offers. Some of the offers have been as high as $140,000.

GM said it made those offers to save money by thinning its work force as sales declined. Most workers who left took early retirement, moving their costs out of GM's coffers and into its overfunded pension plan.

GM's contract with the UAW does not require such offers, but they have been negotiated with the union.

GM says it already is starting to see savings from the new contract because it has hired more than 1,000 workers who are paid $14 per hour, less than half the average UAW laborer's rate. Most, if not all, of those workers will be laid off, though, as GM cuts production because of the sales slump.

The company, however, expects more long-term savings as it hires more lower-paid workers in the future.

The union also agreed to work rule changes in 42 of GM's 61 factories allowing workers to do multiple jobs instead of one job under the old contracts. Other work rules, such as one requiring the company to pay skilled tradesmen whenever they hired an outside crew to do building repairs or other jobs, also were eliminated. GM also no longer has to pay UAW wages to people who clean the plant, the company said.

"This year and every year going forward we will save a half a billion dollars" from the concessions, said Sapienza. "We still have work to do, but were aggressively becoming a leaner, stronger company."

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