Bailout Watch 383: White Collar Buyouts Banned

bailout watch 383 white collar buyouts banned

The Freep reports that GM will not be offering the customary buyout offers to its white-collar employees as it seeks to cut its salaried ranks by double digit percentages. Huh? The General’s offering its UAW workers $20k and a $25k car voucher to bugger off. Turns out GM’s bailout agreement with the government prohibits the ailing automaker from using GM’s pension fund to pay for those kiss-off packages– as it has done in the past. Specifically, the loan states that “the prohibitions on benefit increases under this covenant include… a prohibition on the creation or… payment of any obligations associated with any plant shutdowns, permanent layoffs, attrition programs or other workforce-reduction programs after the effective date.” And guess what? With the pension fund piggy bank cut off, there’s nowhere else to get the money!

The Freep says that’s why the current UAW buyout offer is so much worse than the $100k+ packages of the past. As UAW workers are contractually guaranteed work through the end of the contract period, GM is still willing to dip into its (dwindling) operating cash to buy them out. White collar workers, on the other hand, meh. They can just be fired.

So that’s what’s happening. In fact, GM has even reduced severance pay for its hapless managers (gee, these guys should unionize) from the traditional one month salary per year served.

Join the conversation
2 of 10 comments
  • GS650G GS650G on Feb 10, 2009

    well if the government is going to trim salaries of executives the little guys are going to pay for it too. The law of unintended consequences.

  • SandyOHannon SandyOHannon on Jul 12, 2012

    When GM announced their Pension Buyout Plan on June 1, July 20 seemed far enough away. Now that we're in July, that decision deadline might be feeling a little too close for comfort. Understanding the consequences of the three decisions available to select retirees is a lot of work. In fact, you may have found the phrases and terms require some sort of degree to fully understand. It's okay to be feeling this way; that's exactly why seeking the advice of a professional financial planner has been encouraged. The planners at LJPR, LLC of Troy, MI have years of experience assisting retirees like you navigate the muddy waters of pension plan decisions. They have created an informative video specific to the GM pension buyout options as a service to all GM retirees. You can watch it by clicking You still have time to make an educated decision about your role in the GM Pension Buyout Plan.

  • Inside Looking Out Cadillac now associates with rap music. In the past it was all about rock'n'roll. Rap is environmentally friendlier than rock'n'roll.
  • EBFlex This is nothing compared to what Ford is doing. The fake lightning is seeing massive price increases for 2023. Remember how they self pleasured themselves about the fake lightning starting under $40k? In 2023, the price jumps by a very Tesla like $7,000. And that’s not the biggest price jump. And much less talked about, the government fleet discounts are going away. So for a basic 3.3L Explorer, the price is jumping $8,500. S basic F150 is also now $8,500 more. Im sure the same people that complained about the oil companies making “obscene profits” will say the same thing about Ford.
  • Bobbysirhan Sometimes it seems like GM has accepted that the customers they still have are never going to come to their senses and that there aren't any new dupes on the horizon, so they might as well milk their existing cows harder.
  • Buickman how about LowIQ?
  • Gemcitytm Corey: As a native SW Ohioan, Powel Crosley, Jr. has always been an object of fascination for me. While you're correct that he wanted most of all to build cars, the story of the company he created with his brother Lewis, The Crosley Corporation, is totally fascinating. In the early 20's, Crosley was the nation's leading manufacturer of radio receivers. In the 1930's, working from an idea brought to him by one of his engineers, Crosley pioneered the first refrigerator with shelves in the door (called, of course, the "Shelvador"). He was the first to sell modular steel kitchen cabinets (made for him by Auburn in Connersville). He brought out the "IcyBall" which was a non-electric refrigerator. He also pioneered in radio broadcasting with WLW Radio in Cincinnati (wags said the calls stood for either "Whole Lotta Watts" or "World's Lowest Wages"). WLW was one of the first 50,000 watt AM stations and in 1934, began transmitting with 500,000 watts - the most powerful station in the world, which Mr. Crosley dubbed "The Nation's Station". Crosley was early into TV as well. The reason the Crosley operation died was because Mr. Crosley sold the company in 1945 to the AVCO Corporation, which had no idea how to market consumer goods. Crosley radios and TVs were always built "to a price" and the price was low. But AVCO made the products too cheaply and their styling was a bit off the wall in some cases. The major parts of the Crosley empire died in 1957 when AVCO pulled the plug. For the full story of Crosley, read "Crosley: Two Brothers and a Business Empire That Transformed the Nation" by Rutsy McClure (a grandson of Lewis Crosley), David Stern and Michael A. Banks, Cincinnati: Clerisy Press, ISBN-13: 978-1-57860-291-9.