TM) and Honda ( HMC) produce more technologically advanced and appealing lineups. In fact, many people think the company is bound for bankruptcy in the near future. But the company's woes are hurting real people, too. Jack Dickinson, a retiree with 34 years of sales and marketing experience, presides over a GM retiree group, Over The Hill Car People, which has been overwhelmed with calls and emails from concerned retirees. He says that retirees were very angry about the announcement, and noted that "we have some really sick folks undergoing chemo at the moment," among others for whom this could be fairly traumatic. Dickinson says, "They could have and should have included retirees in the discussion. Calls to GM are not being answered, just receiving a recorded message -- no further information." Letters received by GM retirees last weekend from Kathy Barclay, vice president of global human resources, state that GM will be holding meetings all over the country with retirees from September to December to answer questions. She emphasizes that "General Motors is absolutely committed to assisting the impacted retirees, surviving spouses and dependents."
One reason retirees and their families are upset is the salaried employees accepted slightly lower than average salaries for the work that they did, on the basis that when they retired they would have pension and health benefits for life, thereby compensating for the lower salary. This belief has now been shattered. Oscar Stratton, a GM retiree, comments, "Who thought when they retired in 1984 about what would happen in 2008?" He added that "employees need to realize that retirement perks are perks. Pension, heath care and other retiree benefits could disappear at any time." Dickinson echoes this, saying "This is overwhelming to retirees in their 70's and 80's." Chrysler and Ford ( F)previously cancelled retiree health-care arrangements, making a contribution to a Health Reimbursement Account instead. Chuck Austin President of the National Chrysler Retirement Organization, says, "we were angry because we were promised health care for life. In 1988 they put in a provision that it could be cancelled." A Ford retiree with 40 years in industrial engineering recalls, "It was an absolute disaster for Ford salaried employees." Some retirees questioned why they should even buy the cars from their former employer. One opines, "We gave them courtesy, devotion and loyalty. This should be shown to them now as they have been given." Chuck White, chair of a group of Ford retiree organizations, cautions that retirees should take a moment before reacting: "Step back and look at it, and consider all of the changes. The haircut is being applied to everything -- unions, employees and salaried retirees. If retirees started to protest that they would not purchase Ford or GM products and they were successful, they could put their entire package in jeopardy. Purchasing reduces their risk."
Echoing the concern over the future of retiree benefits, heightened by the announcement yesterday of a reduction of 1,000 salaried staff at Chrysler, Austin says, "We are definitely concerned about the spending account. It is optional, and we have not heard anything yet about the intentions towards the account for next year." "We understand the challenges of foreign competition but tightening your belts should mean that when things get better they get loosened," Austin continues. "That won't happen." White says of the Ford retiree package, "We believe that the retiree benefits are tied to the financial condition of the company -- and yes, we are concerned, but we do not believe that they would make further cuts unless necessary." He adds, "Don't get into a fighting rage. Make the system work for you. Meet with GM, ensure that communications get out. Make it as smooth and as good as you can. My best advice is to ask myself, what is my situation and what do I have to do that is best for me?"