Laid-off autoworkers keep getting paid in GM program

Tue Nov 29, 2005 8:37 AM ET

  By Jui Chakravorty

DETROIT (Reuters) - Dean Braid does not have a job, but the 49-year-old
autoworker is not unemployed either.

The Michigan native, who once helped develop the V6 engine for General
Motors Corp., was laid off after about 20 years on the job -- yet he
still collects his full salary.

"I'd much rather be working, doing what I enjoyed doing," Braid said.
"But things could be worse, I suppose."

Braid is one of thousands of U.S. autoworkers who, instead of working on
engines or installing car parts, spend their time doing crossword
puzzles, watching movies or doing community service -- and keep getting
paid by GM's jobs bank program.

The jobs bank was established in 1984, during contract talks between the
United Auto Workers Union and the Big Three -- General Motors,
Ford Motor Co. and Chrysler Corp.

The program guarantees pay and benefits to union members whose jobs were
eliminated due to technological progress or plant restructurings.

Some analysts estimate General Motors has about 5,000 employees in its
jobs bank, but the auto giant does not disclose figures. However,
according to a four-year labor contract GM signed with the UAW in 2003,
the automaker agreed to contribute up to $2.107 billion over four years.

Rival Ford Motor Co., which was also responsible for Visteon Corp.'s
union employees, agreed to contribute $944 million in its contract,
drawn up the same year.

In most cases, GM workers end up in the jobs bank after 48 weeks in
"layoff status" -- which entitles them to government unemployment
benefits and a supplemental payout from the automaker that brings the
total payment to 95 percent of their take-home pay.

The workers then move into the jobs bank, which entitles them to their
full gross pay. In some cases, workers go directly into the program and
in all cases, the workers can stay in the jobs bank until they are
eligible to retire or be placed in another job.

Braid used to work at the Buick City complex in Flint, Michigan -- once
a manufacturing complex more than a mile long, now reduced to mostly
empty parking lots. Baird lost his job in 1999 when GM ended Buick
production in Flint.

When Braid first joined the jobs bank program, he was required to spend
40 hours a week at the plant, but without work. Others like him go to
the plant and sit around, read the paper, solve puzzles or watch videos.

"People think it's awesome to get paid for something like that. But the
thing is, it steals your dignity, your feeling of self-worth. It's a
horrible thing to ask a worker to do, day after day, year after year,"
he said.

GM spokesman Stefan Weinmann said he was not aware of a mandate that
requires workers to be at the plants. "I'm pretty certain that everyone
has a choice," he said, "they can go to school, go to the plant or do
community service."

Braid now helps Doug, a 50-year-old quadriplegic, with household chores
such as mowing the lawn or patching the roof. It is part of a community
service effort organized by the union, with the support of the company.

COSTLY BANK
As GM struggles with high health-care and commodities costs, loss of
U.S. market share to foreign rivals and sputtering sales of its sport
utility vehicles due to high gasoline prices, analysts worry that new
jobs cuts will add to costs that are already too high.

GM has lost nearly $4 billion this year and its recent announcement it
would shut down 12 plants and slash 30,000 jobs could mean more
additions to its jobs bank.

Some analysts say the union and GM are in talks about the plant closings
and the fate of the affected workers, and that GM was expected to press
the UAW to eliminate the jobs bank.
"We do talk with the UAW all the time but we can't really go into
details on what...the discussions are," Weinmann said.

GM can stop operations at plants before the contract ends in September
2007, but closings are negotiated as part of new contracts. UAW workers
laid off next year will eventually be placed in the jobs bank unless the
automaker negotiates early retirement packages.

"The jobs bank is in place for the duration of the contract. No changes
have been made in light of the new cuts GM announced," a UAW spokesman
said..

"We do want to work with our unions to identify a possibility for some
buyout or retirement packages. Apart from that we'll have to work
through the issues on a local level and try and work out solutions
together," Weinmann said.

J.P. Morgan analyst Himanshu Patel estimates buyouts of union workers
would average $80,000, potentially bringing total costs to $917 million.
"Other restructuring charges could equal or exceed this buyout amount,"
Patel wrote in a research note.

The UAW represents 107,000 GM workers, nearly half of whom will be
eligible for retirement in the next three years. GM workers can retire
with full retirement benefits after a minimum 30 years of service.

GM's restructuring also sets the stage for tense contract negotiations
in 2007 with the union, which called the cuts "extremely disappointing,
unfair and unfortunate."

"I would be two years short of retirement in 2007," Braid said. "So
that's a bit worrying, if they do away with the bank and I don't get
full retirement benefits. But I have colleagues whose children would
just be graduating from high school at the time, and it's a bigger fear
for them."

© Reuters 2005. All Rights Reserved.

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