DETROIT – Chrysler Group will offer some of its 49,600 hourly U.S. workers at select plants up to $100,000 to leave the company as part of a recovery plan announced earlier this month. The company, which lost $1.475 billion in 2006 and said it expects losses to continue through 2007, said on Feb. 14 that it intends to shed 13,000 jobs, including 11,000 hourly positions and 2,000 salaried, as it tries to further shrink itself to match reduced demand for its products.
A company document obtained by The Associated Press outlines an early retirement program for those near retirement age and a buyout program for those with at least one year of seniority with the company.
Under the buyout offer, workers would receive a pretax lump-sum payment of $100,000 plus six months of medical and vision coverage in exchange for their departure.
The early retirement package includes a $70,000 payment, health care benefits and whatever pension a worker was eligible for based on age and years of service.
According to the document, the United Auto Workers union and DaimlerChrysler AG's Chrysler Group reached agreement on the offers, which are not as lucrative as some made to workers leaving Ford Motor Co. (F) and General Motors Corp. (GM) under restructuring plans.
"UAW members are once again stepping forward to make hard choices," union President Ron Gettelfinger said in a statement. "Now it's up to DaimlerChrysler to move the company forward, by using the skill and dedication of our members to deliver quality vehicles that customers want to buy."
The offers come as Chrysler tries to reduce production by 400,000 vehicles per year.
Early retirement and buyout offers will go to facilities targeted for cuts, including a plant scheduled for closure in Newark, Del. Depending on how many take the offers, Chrysler could make more at plants not affected by production cuts.
Of the production job cuts, 9,000 are in the U.S. and 2,000 are in Canada. All the cuts will take place during the next three years. Chrysler's 10,060 Canadian workers were given separate offers earlier this month.
The company document said that each U.S. facility would have different timing for workers to take the packages, but the timing for plants set to lose production this year will be between April and December. Further cuts scheduled for 2008 and 2009 will be done in similar fashion.
To be eligible for early retirement, workers must have 30 years with the company or be at least 60 years old and have at least 10 years of service, or be at least 55 years old and their age and years of company service must total 85 or more. A worker also could be at least 65 and have at least one year of pension credit to be eligible, according to the document.
Chrysler, part of Germany-based DaimlerChrysler AG, said Feb. 14 that that 11 U.S. plants would be affected by the downsizing.
The Delaware plant would closed during the next two years, and Chrysler also plans to cut shifts at plants in Warren, Mich., and St. Louis.
Other plants that will see job losses include a machining plant in Toledo, Ohio; a Detroit axle plant; the Mack Avenue Engine Plant I in Detroit; an engine factory in Trenton; stamping plants in Sterling Heights, Warren and Twinsburg, Ohio; and the Indiana Transmission Plant I in Kokomo.
The company also announced that a parts distribution center near Cleveland will close this year.
The targeted factories generally make components for slow-selling trucks and sport utility vehicles, the company said.
In addition to the cuts at those facilities, Chrysler plans to eliminate 3,000 hourly jobs due to expected productivity gains at yet-to-be identified plants, said spokesman David Elshoff.
In all, 4,725 hourly posts will be eliminated this year, with the remaining 4,275 in 2008 and 2009, Elshoff said.