UPDATE:GM Confirms 'Jobs Bank' To End Monday; Affects 1,600 Workers
January 28 2009 - 4:28PM
Dow Jones News
General Motors Corp. (GM) will suspend its "jobs bank" program
Monday, becoming the second of the Big Three U.S. auto makers to
announce such a move this week.
About 1,600 workers will now be classified as laid off and must
apply for state and federal unemployment benefits. Workers will
receive some GM-subsidized payments along with their unemployment
benefits which means they will continue to earn about 72% of their
pay.
The move will allow cash-strapped GM to use state unemployment
benefits to help cover some of the costs of paying the workers.
"We continue to restructure for long-term viability," GM
spokesman Tony Sapienza said.
Part of that restructuring includes talks with the United Auto
Workers about continued "sub pay" contributions and other issues,
Sapienza said. Chrysler LLC ended its jobs bank program earlier
this week and moved about 1,000 union workers to lay
off-status.
GM, like Chrysler, needed federal loans to stave off collapse at
the end of last year; ending the jobs bank was a condition of the
government loans. GM and Chrysler must also submit a plan by March
31 showing how they will make more cost cuts and improve their
competitiveness if they hope to win more federal money. A status
hearing is set for Feb. 17.
The U.S. auto makers are required under UAW contracts to "bank"
employees when there are production cutbacks. Those workers usually
receive 85% or more of their pay - through benefits and sub pay -
even though they don't do any work.
Ford Motor Co. (F), which didn't take any federal money, is also
seeking similar concessions with the UAW. Ford has about 1,400
workers in the bank as of November.
Separately, the U.S. Treasury Department said GM and Chrysler
must submit monthly milestones and actions to be taken on a monthly
basis through 2010 to the agency by Feb. 17. The requirement is
part of the $17.4 billion loan package the two auto makers received
from the federal government last month.
The information was disclosed in new loan documents released by
the U.S. Treasury Department. The department is requiring the two
auto makers submit detailed restructuring plans on or before Feb.
17. Those plans need to include details on how labor costs and
bondholder agreements will be modified.
Shares of Ford closed up 3% to $2.03 Wednesday but are down to
$2 in recent late trading. GM shares closed up 2.1% to $3.42 but
are down to $3.40.
-By Jeff Bennett, Dow Jones Newswires; 248-204-5542;
jeff.bennett@dowjones.com
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