The General Motors and Ford buyout programs will be good for the industry. They allow the automakers to trim their payrolls with as little pain as possible as they struggle to reduce overhead and cut costs.
Some 34,000 GM hourly workers opted out -- more than expected -- which was a big factor in helping GM cut its pension obligation by $3.9 billion and its estimated retiree health care spending by $19.3 billion.
Based on the reported initial reaction among Ford workers, a broad buyout offer there ought to be successful, too.
Just as important, because so many tenured employees are heading for factory exits, Ford and GM may need to hire employees to replace some of the retirees. That opens the door for a Detroit 3 pattern agreement with the UAW in 2007 that's more in line with modern global economic realities. A new agreement will most likely have new hires entering at specially crafted (lower) wage rates.
Once upon a time, the U.S. theory of economic security dictated that it was good to broom workers out of the economy at age 65 to create openings for younger workers. Social Security and most industrial defined-benefit pension plans were concocted in accordance with that theory.
Of course, that was back in the days when there were fewer two-income households, and most retirees who left at the stroke of 65 spent a few years down at the old fishin' hole before conveniently shuffling off this mortal coil.
That made the economic model work.
These days, you can hardly go shopping at the local mall without dodging a horde of septuagenarians and octogenarians doing their daily laps.
We're taking better care of ourselves and living longer. As a result, 80 is the new 65, which means 60 is the new 45.
That's good news, but it wreaked havoc with the old actuarial assumptions, jumbling some of the legacy cost issues.
Today, there are enough folks in their 80s who are working, people like Kirk Kerkorian, Lee Iacocca and my colleague, Jack Teahen, to offset some of the workers who are bailing out early.
There are bound to be some ex-autoworkers who double dip and take another job, maybe even one that otherwise might have been filled by younger, less-experienced workers looking to move up the employment chain.
If those younger workers get jobs in auto plants, the cycle will be complete.
You may e-mail Edward Lapham at [email protected]