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June 19, 2009

Chrysler workers avoid furloughs

Lower bankruptcy costs spare staff 2 unpaid weeks

Salaried Chrysler workers will not have to take a two-week unpaid furlough this summer because the company's expenses throughout its 41-day Chapter 11 bankruptcy were less than anticipated.

"The company found savings in the process that rendered the furloughs unnecessary," said Chrysler spokesman David Elshoff. "It's another reason why it's good news to have bankruptcy in our rear-view mirror."

While that is welcome news to about 10,000 white-collar employees of the Auburn Hills automaker, it will not by itself stimulate a sluggish economy in southeast Michigan and other areas where Chrysler has significant salaried staff, said Dana Johnson, chief economist for Comerica Bank.

Assuming about 7,000 of those workers live in southeast Michigan, removing the furlough option means that they will receive about $32 million before taxes, for what traditionally has been vacation. That was how much they have received in previous years, but because of the need to conserve cash during the bankruptcy, it wasn't clear whether the company would pay workers for their time off this year.

Michigan's gross domestic product for 2008 was $383 billion.

"It's not even 0.1% of the state's economy," Johnson said. "It's nice that they were treated well, but it's not going to change the economic trajectory very much."

But for Chrysler employees, it's another small, but symbolic confirmation that the company can move forward. Vehicle production resumes June 29 at seven of 12 assembly plants. Production of the Dodge Viper sports car began Monday at Chrysler's Conner Avenue plant in Detroit.

LINK: Chrysler workers avoid furloughs | | Detroit Free Press
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