GM: 7,500 workers to take buyouts
Nearly 12% of GM's remaining U.S. hourly workers agree to leave company by Wednesday as GM continues cost-cutting efforts.
NEW YORK (CNNMoney.com) -- General Motors announced that 7,500 factory workers had taken its latest buyout offer as the embattled automaker continues its efforts to cut costs as part of its request for additional federal help.
The workers leaving the company represent about 12% of the GM's remaining U.S. hourly work force, leaving it with just under 55,000 factory workers in the United States.
Most of the workers who took the buyouts will leave the company no later than Wednesday, the start of the second quarter.
The company did not give any update about its plans to cut 10,000 salaried workers worldwide, or 14% of that staff. Those cuts, which include just over 3,000 U.S. salaried jobs, are to be completed by May 1.
GM has offered buyout packages to all of its remaining hourly workers. It said to the extent that the hourly workers need to be replaced, the company will try to use laid-off GM staff, who are generally still receiving money from GM to supplement their unemployment compensation.
Even if the company needs to hire someone new to replace a departed worker, the company will save money under terms of the 2007 labor contract that pays new hires at a lower wage scale and with a far less lucrative benefit package.
But GM spokesman Tony Sapienza said given the current weak market for auto sales, the company does not expect to have to hire any workers in the near term.
GM did not set any target for the size of the staff reduction it was seeking with this buyout offer.
"We're pleased," said Sapienza when asked if this met the company's cost-cutting goal. "We feel this is a significant milestone of progress towards our restructuring plan and ultimately it will lead to a leaner and stronger company."
More than 90% of those taking the package are eligible for retirement and will receive full pension and health care coverage, in addition to the buyout package, which includes $20,000 in cash and a $25,000 voucher towards the purchase of a GM car in most cases.
The company did not say how much it expected to save as a result of these buyouts. But investors seemed to like the news. Shares of GM rose more than 16% in midday trading.
GM received $13.4 billion in federal funds to stave off filing for bankruptcy at the end of last year. It has asked for up to $16.6 billion in additional government loans. The Treasury Department has until Tuesday to consider the request, although GM announced earlier this month that it would not need that money this month due to the success of other cost-cutting efforts.
President Obama pledged Thursday to take the steps necessary to save GM and its rival Chrysler LLC, adding that the administration's auto task force would make an announcement in the next several days about their request for more loans.
"It's important because ... not just the people who work for GM or Ford or Chrysler, but all the suppliers, all the ripple effects that are created as a consequence of our auto industry," he said.
But he cautioned that the automakers would have to make significant changes in order to get the federal help they are seeking.
Chrysler, which received $4 billion in federal loans and is seeking an additional $5 billion in help, has also offered buyouts to its hourly workers. The company said its buyout offer is still ongoing.