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GM, Ford, and Chrysler Pay Over $300 Million for Retirees

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On: Fri, Dec 17, 2010 at 2:10PM | By: Sherry Christiansen


GM, Ford, and Chrysler Pay Over $300 Million for Retirees

General Motor has spent over $200 million this week paying out inflation bonuses to the company’s more than 250,000 retirees. The United Auto Workers (UAW) retirees will get up to $700 each; an additional 72,000 surviving spouses can receive up to $455.

The other two members that make up Detroit's Big Three have recently issued checks to their retirees, as well. Chrysler Groups shelled out $35 million in December to UAW-represented retirees and surviving spouses, plus another $6 million to hourly retires who are represented by other unions. Ford Motor Company anticipates paying out around $70 million in the coming weeks for the same reason. All of these payments are required according to contracts that were negotiated by the automakers and the UAW.

Presently, there is a wage freeze in place for the active auto workers at GM, Ford, and Chrysler. For this group, there will be no inflationary pay adjustments this year. Fortunately for them nationwide inflation is presently low, hovering around the 1.15% level in recent months. Hourly employees also had to forgo cost-of-living allowances in 2010 and 2011, due to certain contract concessions that were made in 2007 and 2009.

In terms of hourly workers, GM employs about 53,000, while Ford carries 41,000 of their own. Employees drawing salaries are not eligible for the cost-of-living allowances. At GM none of its 26,000 salary-receiving employees will get a raise next year, although company chief executive officer Dan Akerson is trying to change that for some. To do so Akerson will need to get special government approval. The problem is that other automotive firms are beginning to lure away talented GM executives with compensation packages that GM is presently unable to match, even if they wanted to, largely due to government control of company policies, since GM took a Government bailout last year.

According to GM spokeswoman Sherrie Childers Arb, the UAW retiree’s payments were made on December 13th. Those who are eligible tend to refer to the checks as Christmas bonuses because they are always paid out during the last month of the year.

Dirk Danjin is a retired GM employee and a former UAW representative. Danjin stated that he would have liked to see the active workers get their cost-of-living allowances this year as well, especially since GM has recently reported profits, Chrysler's financial position is better, and good growth in projected for the industry in 2011.

Danjin said, “The companies had a contractual obligation to us. It’s a shame, though, that some concessions couldn’t be made to active employees given the state of affairs at GM and Chrysler.”




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