U.S. Automakers In the “Golden Parachute” Business

On Monday, Chrysler LLC announced that it would be offering buyouts of up to $100,000 each to hourly workers at 12 of its Detroit-area facilities as part of its plan to eliminate up to 10,000 unionized jobs in 14 months. Chrysler spokeswoman Michelle Tinson said the buyouts could be extended to a 13th plant in Warren, Michigan, and that Chrysler is in talks with the United Auto Workers (UAW) union to extend them to eight other U.S. plants. In all, some 14,000 hourly workers, approximately 1,000 salaried workers and 40% of Chrysler’s white-collar contractors would be eliminated. car parachute

These cuts are part of Cerberus Capital Management’s (Chrysler’s new parent company) plan to slash North American production. Cerberus’ cuts are in addition to the 13,000 jobs Chrysler had already planned to eliminate in February. Taken together, the combined cuts represent a reduction of its U.S. unionized factory workforce to less than half.
Chrysler’s buyout offer runs through February 18 and includes a lump-sum payment of $100,000 and six months of health benefits. Approximately 4,600 workers may opt for a more attractive retirement package that includes a lump-sum payment of $70,000 as well as better pension and health-care benefits.

Chrysler is not alone; General Motors Corp (GM) and Ford Motor Co announced in January that they had launched buyouts for UAW-represented hourly workers in North America. GM’s buyout offers cover about 46,000 workers, while Ford said it would offer buyouts to all 54,000 UAW hourly workers (representing 93% of its hourly work force and an unspecified number of salaries workers).

Ford is offering eight different packages for employees, including a $50,000 lump-sum payment for non-skilled workers near retirement and a $70,000 lump-sum payment for skilled workers. GM is offering buyout packages ranging from $35,000 to $140,000.

What does this mean to you? Are there any opportunities here?

While I empathize with the workers affected by the job cuts and understand that many may be fearful of what’s ahead for them and their families, I also understand that there is an opportunity in every crisis. In this case, the opportunities exist both for the affected workers and for others interested in helping, hiring or collaborating with them.

Opportunities:

Entrepreneurship - Affected workers, many of whom are highly skilled and trained, may invest in or start new ventures in the auto industry and have their former employers as clients. Even with the bulk of the jobs now being shifted to lower-wage jobs in the U.S. and overseas, there will still be a need for more highly paid expertise in the form of contractors, consultants and vendors as the U.S. automakers effect their turnarounds.

Investing - Workers are walking away with cash that they may want to invest. Since the stock market is not the most attractive vehicle right now, and since the real estate business is dicey, especially in Detroit, many workers may be looking for a more promising investment opportunity, say investing in an established business that simply needs a cash infusion to expand.

Financial Planning/Advice - Not every affected worker will be interested in investing, but many may be interested in getting sound financial advice. So, financial planners and advisors may find themselves perfectly positioned to help displaced workers plan their financial futures.

Professional Development/Education - Finding themselves suddenly unemployed, many displaced workers may decide to go back to school or engage in other learning activities to gain new knowledge and build new skills. Professional training companies, continuing education organizations, for-profit colleges, and traditional colleges, universities and community colleges can benefit. Career and life coaches may also benefit from workers who are not certain which job skills or knowledge to pursue.

Employment/Recruiting - This is probably the most obvious of the opportunities, but it’s nonetheless important. Detroit and other affected cities will be awash in skilled labor ripe for the picking.

These are but a few of the available opportunities.