GM buyout draws mixed reactions, some relief seen
DETROIT, Mar 24 (Reuters) Generations of General Motors Corp. workers on Thursday started weighing whether to leave their jobs or stay -- a decision analysts said could determine if GM emerges as a smaller, profitable automaker.
Chances are, however, that the exodus will not be big enough to clear the world's largest automaker of its problems, even though some relief is expected, they added.
Reactions to GM's buyout offers, announced on Wednesday, varied among workers, with younger employees worrying about their future because the offers would not include health benefits, and some older ones getting ready to retire.
But some senior GM workers might just refuse to go. Terry Brumley, 63, who works at the Corvette plant in Bowling Green, Kentucky, has been with GM more than 40 years.
''I'm not taking the money. I can raise a garden, go to dinner with my wife and go fishing, and still have a job. So why should I retire?'' he asks, adding that he sees himself working for at least another 10 years.
Still, union officials say older workers with decades of service are more open to considering the buyout packages, which offer up to 0,000 in a lump sum. But most younger workers, officials said, are likely to stay.
The automaker lost .6 billion in 2005 as it struggled with high labour and commodities costs, loss of U.S. market share to foreign rivals and sluggish sales of sport-utility vehicles -- typically its largest profit generators.
As part of a broader restructuring effort, GM plans to slash 30,000 jobs and close 12 facilities in North America through 2008.
''Yesterday's announcement raises our confidence in GM's ability to meet its 30,000 headcount reduction target by 2008,'' JP Morgan analyst Himanshu Patel wrote in a research note.
But, Patel added, progress on health-care costs from the buyouts is ''limited,'' and would depend on how many workers head for the exits.
GM has agreed to a deal with its union that would save it billion in annual health care costs, slashed its dividend in half, and cut top executive pay. Still, analysts have said the automaker needs to cut costs much more.
Patel also said GM has about 36,000 workers eligible for early retirement -- 75 per cent of whom are expected to opt for the package. That would save GM 0,000 per employee, per year, implying annual savings of .5 billion, he said.
TO STAY OR NOT TO STAY ''Members of high seniority are very interested,'' Eldon Renaud, president of the United Auto Workers Local 2164 in Bowling Green, Kentucky, said. ''There were a lot of people that were ...
holding on to see if there was going to be a buyout offer.'' Several union officials said workers who have been thinking about a career change or those worried about the auto industry overall are the ones considering the offers.
''I think a lot of us who have been in General Motors a long time realise that it's a cyclical industry and we have ups and downs all the time,'' Renaud said.
Oscar Bunch, president of UAW Local 14 in Toledo, said younger workers will likely hesitate because of the loss of health care benefits.
He said that '',000 can disappear pretty quickly in one hospital visit.'' Whatever the rate of acceptance, buyouts alone will not be enough to turn GM around, said Ron Tadross, analyst at Banc of America Securities.
''The UAW cannot give enough to allow GM to properly invest in its product line,'' Tadross wrote in a research note. ''So, we expect continued share loss and supplier bankruptcies.'' GM has been losing share to Asian rivals without the same cost burdens. GM's fixed costs per vehicle are about