According to recent reports, Toyota has begun to offer “retirement incentives” to approximately 2,000 of its senior employees throughout the United States. That number represents about 10 percent of its total workforce in the country.
Moreover, most of those employees (1,600) are currently employed at the Georgetown, Kentucky plant. That number represents about 25% of the total number of employees there, according to a Toyota spokesperson. They began to hire people at the plant for their opening back in 1988, and today they build the Camry and Avalon sedans, as well as the Venza crossover. So in other words, they build the Camry and two other variations of.
Here’s how the retirement incentives breaks down:
Employees with 25 years of service will qualify for full medical benefits, pension, and 401K (I’m assuming that they must have switched from one to the other at some point, so the older workers are grandfathered in). Employees with 22 years or more of experience have the option to take this retirement incentive by “purchasing” additional years of service. Toyota has not disclosed what the price of that will be, as of this writing.
Employees that take the retirement incentive will be paid for two weeks for every year of service (up to 25 years), plus an additional eight weeks of pay. In exchange for this, the workers agree to a set schedule to be laid off from the company. In order to avoid having to do the math in your head, if a worker that’s been there for 25 years makes the average hourly rate of $26, then they are scheduled to receive approximately $60,320 before taxes. Now, if Toyota taxes this as a “bonus”, then they are subjected to a higher tax rate, otherwise, it’ll be taxed at whatever withholding rate the worker initially selected.
Toyota has stated that the reason why they are offering the retirement incentive to their senior employees is to be able to control the attrition rate. They fear, like most companies do, of a mass exodus of their most knowledgable employees, due to retirement, change in employers/careers, etc. By staggering out the attrition schedule, this will allow them to hire new employees at a lower wage (about $16.hour). It remains to be seen whether or not Toyota will replace them with more full-time workers, or keep doing what they have been doing.
If these retirement incentives sound familiar to you, that’s because the Big Three (General Motors, Ford Motor Company, and Chrysler) had offered similar programmes to their workers four years ago. Granted, the retirement incentives were far richer, but those companies were more motivated to reduce their labour force and legacy costs. Will Toyota follow through with their offer, or will they try to screw their employees over? History and personal experience dictates the latter…stay tuned, as I have a feeling that this is not the end of this story…