DETROIT – About 35,000 hourly workers at General Motors Corp. (GM) have taken buyout or early retirement offers, surpassing the company's expectations as it tries to cut costs by paring its hourly work force, GM Chairman and CEO Rick Wagoner said Monday.
The job cuts will help GM's long-term turnaround plan as it cuts production capacity to match its current sales and market share. GM previously announced plans to cut its 113,000-person U.S. hourly work force by 30,000, closing 12 plants by 2008. GM said it now expects to reach its job reduction target by Jan. 1, 2007, about two years ahead of schedule.
"Over the past several months, we have accomplished a great deal in our strategy to reshape GM into a company that is more nimble, more global and built for long-term success," Wagoner said in a statement.
The deadline for GM workers to file paperwork for the offers was Friday, but they have seven days to change their minds. Friday also was the deadline for workers at Delphi Corp., GM's former parts operation that is now a separate company, to file for early retirement incentives.
Delphi said Monday that about 12,600 UAW-represented employees took one of the buyout or retirement offers at the automotive parts supplier, which filed for bankruptcy protection last October. Some Delphi workers also have an additional buyout offer on the table with deadlines that are more than a month away.
Based on preliminary numbers from GM, about 4,600 employees accepted buyouts and about 30,400 chose to retire. It is expected that most will retire or leave the company by the end of the year, GM said. Delphi did not break out how many workers took each option.
The nation's largest automaker said it expects to save $5 billion in structural costs in 2006.
Because so many people are leaving, both GM and Delphi will have to scramble to keep plants and assembly lines running by recalling laid-off workers, bringing in transfers from other plants and hiring new people.
"There will be this challenge to make sure there are enough workers in certain locations. You can't just move people around like chess pieces," said Greg Gardner, spokesman for Harbour Consulting, a Troy company that tracks manufacturing productivity.
Turnout was especially heavy at those targeted for closure or sale.
At a GM sport utility vehicle assembly plant in Oklahoma City that's idled and slated to be shut down, the UAW local reported on its Web site that 1,426 workers — almost 60 percent of the 2,400-member local — accepted the offers. Another 377 will transfer to other plants.
Gerald Meyers, former chairman of American Motors Corp. who now teaches at the University of Michigan, said the cuts initially will cause problems, but eventually will be positive for both companies.
"It's a manufacturing manager's nightmare with all these people moving in and out," said Meyers, who predicted quality problems for Delphi and to a lesser degree, for GM, as the transition is made to a smaller work force. "It'll take weeks before these people learn their jobs and before they find out how tired they're going to get. It'll show up in the quality of the product," he said.
Delphi may lose so many workers that it will have trouble producing its products, said Rob Betts, president of a UAW local at a Delphi plant in Coopersville.
"It could end up being dangerous, a threat to the business," said Betts, who said skilled workers are being replaced by inexperienced people earning far less money.
Analysts say they don't have good estimates on how much all the buyouts and retirements will cost GM. But the company had about $21 billion in cash in March, said Robert Schulz, an industry analyst with Standard & Poor's in New York.
The job cuts are an important first step toward GM's long-term stability, but won't turn the company around by themselves, said Erich Merkle, an analyst with IRN Inc., an automotive consulting organization.
"The other side of the equation is the revenue side. They've got to do something to stabilize their sales and market share. At the end of the day you still have to build products people will buy," Merkle said.
GM shares rose 78 cents, 2.9 percent, to close at $27.75 on the New York Stock Exchange.