GM's retooled plants may bring back laid-off workers

Washington - General Motors may fill most of the 5,500 jobs created by its $1.4 billion retooling of 18 U.S. factories with laid-off workers, the automaker's manufacturing and labor chief said.

The company has 5,000 to 6,000 workers on indefinite layoff, Diana Tremblay, the GM executive, said in an interview. Those employees have first rights to any openings from the factory upgrades, including a third shift with 1,200 positions in Lordstown, Ohio, announced Tuesday, she said.

GM, the largest U.S. automaker, is revamping its production after exiting bankruptcy with government aid in July. The Detroit-based company had scaled back as it lost U.S. sales and market share before seeking court protection.

"People that we have that are laid off will have the first opportunity for the jobs so it really depends on how many people decide they want to take the jobs," Tremblay said. "Then we would fill up the rest of the workforce with new hires."

A $350 million investment

The Lordstown factory will operate around the clock to produce the Chevrolet Cruze small car. GM is investing $350 million at the plant, with the third shift to start in this year's second half, Tremblay said.

GM has about 300 workers on indefinite layoff who live near the plant, and others on furlough who live elsewhere could take the remaining jobs if they agree to move or commute, she said.

The company will generate enough jobs to add new hires "when there is a significant recovery in actual automotive sales," Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Mich., Tuesday in an e-mail. "The market still sucks."

Being able to hire new employees would help GM trim labor costs because its United Auto Workers contract lets it pay them about $14 an hour, half the current rate, with fewer benefits.

GM needs one-fifth of its 46,000 U.S. hourly workers at the lower wage to match Toyota Motor Corp.'s labor rates, McAlinden said.

The company's U.S. hourly compensation costs, including wages and benefits, are about $1 to $2 higher than the $50 an hour for Toyota workers, Tremblay said.

"The difference between a dollar or two an hour is not what makes or breaks a company's success," she said. Tremblay said she couldn't estimate when GM would match Toyota's labor costs because it's not clear how quickly U.S. auto sales will rebound from last year's 10.4 million, the lowest since 1982.

McAlinden said his estimate for GM is $55 an hour, which matches the figure Ford Chief Financial Officer Lewis Booth cited.

Ford isn't planning any hiring as it invests $1.6 billion to retool plants in Michigan, Illinois and Kentucky to build fuel-efficient autos to compete with Toyota. After cutting 47 percent of its North American workforce since 2006, Ford isn't ready to resume adding to its payroll, Booth said. The company said it has about 600 workers on indefinite layoff.

GM anticipates strong demand for the Cruze, which has the interior space of a midsize car and is expected to get 40 miles per gallon in highway driving, Tremblay said. She declined to say how many of the cars will be built annually at Lordstown.

Small cars rose to 17.9 percent of U.S. auto sales in January from 17.1 percent a year earlier, according to researcher Autodata Corp. of Woodcliff Lake, New Jersey.

"We think this vehicle is going to do really well in the marketplace," Tremblay said. "We're not counting on the segment having to grow in order to make these units."