Chrysler Group Offers Buyouts, Early Retirement Packages To 13,000 Employees

Main Category: Seniors / Aging
Also Included In: Health Insurance / Medical Insurance
Article Date: 30 Jan 2008 - 5:00 PDT

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Chrysler Group on Monday offered buyout and early retirement packages to about 13,000 hourly workers as part of an effort to reduce the company work force by 10,000, the Detroit Free Press reports (Higgins, Detroit Free Press, 1/29).

Under the four-year contract that Chrysler signed with the United Auto Workers in October 2007, Chrysler will contribute $8.8 billion to a voluntary employees' beneficiary association managed by UAW, a move that would shift retiree health care liabilities from the company to the association. Chrysler will pay about $1.5 billion in 2008 and 2009 for retiree health care liabilities before the VEBA assumes them in 2010. The contract also will establish a two-tier wage system (Kaiser Daily Health Policy Report, 10/29/07). The system will allow Chrysler to replace noncore employees with new workers who will receive reduced wages and benefits.

The packages announced on Monday "seemed to focus on facilities that do so-called noncore work," but "Chrysler has indicated that the current cuts are solely related to cutting capacity to meet falling consumer demand," the Free Press reports (Detroit Free Press, 1/29).

Under one package, employees who are on temporary or indefinite layoff or have at least one year of service will receive a lump-sum payment of as much as $100,000 and six months of health care benefits. Employees who qualify for retirement will receive a lump-sum payment of $70,000 and a regular pension. A second package will provide full benefits to employees who are near retirement age but no lump-sum payment. Employees have until Feb. 18 to accept a package. Employees who accept buyouts will begin to leave Chrysler in April, and others will leave in subsequent months (AP/Boston Herald, 1/28).

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