AUTO INDUSTRY : GM to Omit White-Collar Bonuses in ’92 : Cars: It says it wants the ‘pain of fixing this company’ to be shared. Meanwhile, talks continue in an Ohio strike.
DETROIT — General Motors Corp.’s salaried employees will get no merit increases or bonuses this year, a cost-cutting move that analysts said was timed to influence negotiations with unionized workers.
“GM wants to send a message to the United Auto Workers union that everyone will share in the pain of fixing this company, and that’s a message the UAW needs to hear,” said John Casesa, an analyst with Wertheim Schroder & Co. in New York.
GM has about 80,000 salaried employees in North America, where it lost $7 billion last year. Some analysts have estimated GM’s losses through the first half of the year in North America at $2 billion.
The auto maker has reported global losses of $218 million this year.
GM told white-collar employees last December that a decision about merit pay and bonuses would be made after mid-1992. It issued that decision Wednesday in a letter distributed to employees.
“Our North American operations continue to sustain large losses and face enormous competitive challenges, which must be addressed if we are to restore profitability in North America,” the letter said.
GM generally sets 3% to 5% of its salary pool aside for merit increases and recognition bonuses.
For some employees, losing raises and bonuses amounts to a pay cut, because they count on what traditionally has been an annual salary increase in the form of merit pay.
Last week, the company told salaried employees that they would have to begin paying health insurance premiums for the first time since the 1960s.
The latest blow to salaried employees knocks them down another peg in comparison to GM’s UAW-represented hourly workers, whose contract includes fully paid health benefits and a $600 Christmas bonus.
Meanwhile, GM got some good news Thursday when an auto workers local that had threatened to strike reached an agreement to avert a walkout at an assembly plant in Lordstown, Ohio.
Talks continued in a strike at a nearby stamping plant that has led to closures of GM facilities that use the plant’s parts. Neither side would discuss whether progress was being made.
The strike has crippled production of parts needed for 14 GM models. Consequently, more than 32,000 workers whose factories need those parts have been laid off.
The settlement with UAW Local 1112 at the Lordstown assembly facility involved health, safety and job security grievances.
Local 1112’s 7,000 members were laid off last week because of the parts shortage stemming from the stamping facility strike. Local 1112 had said it would strike at 4 p.m. today if a settlement was not reached.
The Lordstown assembly operation uses parts from the strikebound parts plant to make Chevrolet Cavaliers and Pontiac Sunbirds.
The 8-day-old GM strike has caused car and truck production by all North American auto makers to fall 14.3% to an estimated 202,801 this week from 236,691 last week.