Chrysler offers buyouts to all hourly workers
In an attempt to cut costs, struggling automaker offers cash and a voucher good for the purchase of a car to union employees that agree to leave company.
NEW YORK (CNNMoney.com) -- Chrysler LLC is offering buyouts to all of its remaining U.S. hourly workers in its latest effort to cut costs and provide an exit for workers who are increasingly nervous about staying with the troubled automaker.
According to a letter from a United Auto Workers executive to union members, Chrysler is offering up to $50,000 to virtually all of its 27,000 U.S. hourly workers, along with a voucher good for up to $25,000 on the purchase of a vehicle.
The letter, which is posted on a Web site of one of the UAW locals, is from United Auto Workers union vice president General Holiefield, who is head of the union's negotiating team with Chrysler.
Some retirement-eligible workers at plants that are set to close could get up to $115,000 in cash in addition to the $25,000 voucher. The packages are similar to ones Chrysler offered to its hourly workers late last year, although the voucher replaces part of the cash that was offered in 2008.
In fact, Chrysler rivals General Motors (GM, Fortune 500) and Ford Motor (F, Fortune 500) also offered companywide buyouts to their hourly workers last year.
GM offered all 74,000 of its U.S. hourly workers and had about 19,000 leave the company. Ford had about 7,000 of about 54,000 workers take various buyout offers. Chrysler did not have numbers of workers offered or accepting the previous offers immediately available.
The latest buyout offer is another example of how the nation's three struggling automakers are trying to cut costs. The UAW agreed last week to eliminate a so-called "jobs bank" at Chrysler, as well as at GM and Ford.
The jobs bank had provided near full pay to UAW members whose positions were eliminated.
In his letter, Holiefield said he negotiated the new offer with Chrysler because of the rising concern among some members about the company's future prospects. He said that many workers may have accepted the earlier package if they had known about the end of the jobs bank and other difficulties facing the company.
The offer took effect Monday, and will run through Feb. 25, according to the letter. Holiefield and union spokesmen were not available for comment Monday afternoon, and company officials said they could not comment on the new offer.
The letter does not indicate how many jobs Chrysler hopes to eliminate, or how many positions would be filled by new hires. Under terms of the 2007 labor deal, new hires at the three automakers receive a significantly lower pay scale, and with far less lucrative benefits than those who were on staff when the 2007 deal was struck.
David Cole, chairman of the Center for Automotive Research, said the fact that Chrysler was offering the voucher for a car, rather than all cash, in this round of offer, is a sign of the need to preserve cash, as well as the realization that workers might be willing to leave with less money in their pocket this time around.
"As people become more scared, a bird in the hand is worth two in the bush," he said, adding that if enough workers chose to leave Chrysler, it could increase the chance that Chrysler would chose to combine with another automaker rather than hire new workers.
The offer comes the day before Chrysler and other automakers will report what are expected to be exceptionally weak January sales. It could end up being the worst month for the industry since 1982.
Sales tracker Edmunds.com is forecasting that Chrysler sales will plunge 48% from a year ago, the largest drop expected among the major automakers.
Chrysler, which is owned by private equity firm Cerberus Capital, was in danger of running out of the cash it needed to operate at the end of last year until it received a $4 billion emergency loan from the Treasury Department.
Under terms of the loan, it must show progress towards bringing its labor costs in line with those at the nonunion U.S. plants of Asian automakers such as Toyota Motor (TM) and Honda Motor (HMC), or risk having the federal loan recalled. 
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