Toyota Motor North America buyout offer to workers includes 2 years in pay: Who's eligible

Some Toyota Motor North America employees are currently reviewing a bountiful, out-of-the-box buyout that will trigger a what-the-heaven double take from anyone offered a voluntary separation package recently at Stellantis, Ford Motor or General Motors.

We're talking about very rich lump-sum payments as part of a Toyota reorganization plan, known as the REV plan, that could entice many Toyota employees, including those in Michigan, to voluntarily leave their jobs in 2024.

Why will Detroit Three white-collar workers get jealous when they hear about the Toyota deal? Unlike other automakers that offered up to one year's pay as severance, some longer-term Toyota employees will get a lump sum payout that amounts to two years in pay if they volunteer to leave.

The Toyota reorganization includes sales, product support, corporate resources, and research and development operations, according to an 18-page Toyota document given to some Toyota employees in Michigan and later obtained by the Detroit Free Press.

Toyota employs more than 2,000 people in Michigan at research and development facilities in Ann Arbor Township, York Township, Plymouth and Livonia, according to data released in June by the Michigan Economic Development Corp. Toyota marked 50 years in Michigan in 2022.

Toyota announced in June that it would spend nearly $50 million to build a new battery research lab in York Township, which is slightly fewer than 50 miles from downtown Detroit.

What does Toyota's voluntary severance plan say about who is eligible?

The Toyota voluntary severance offer, according to documents given to some Michigan employees, was dated Dec. 11. The offer must be accepted or rejected by Jan. 25. The buyout is not being offered to everyone and it may not be as widespread as some deals offered by the Detroit Three. In some cases, it may only be offered to certain levels of employees.

The official paperwork notes that ineligible positions include: Those working in "Enterprise Strategy Battery Obeya" positions; corporate resources jobs at both Toyota Battery Manufacturing in North Carolina and the Toyota North Carolina Temp Office, and other specific jobs in compliance, finance and elsewhere.

The document obtained by the Free Press notes that the offer will be made to select team members who voluntarily resign from Toyota Motor North America; Toyota Motor Sales, U.S.A. Inc.; Toyota Motor Engineering & Manufacturing North America Inc.; Toyota Logistics Services Inc., and Toyota Racing Development Inc.

Toyota has not spelled out how many people are being offered buyouts or what specific types of jobs are being targeted. Toyota did not address specific questions relating to the buyout asked by the Free Press.

In response to the Free Press, a Toyota communications representative only stated: “As part of our plan to accelerate the future of mobility and meet the evolving needs of our customers, Toyota is announcing a Voluntary Exit Package for certain team members in specific leadership positions with at least five years of service."

Toyota said its voluntary program will allow the company to "flatten its organizational structure to become more nimble, agile and make decisions more efficiently, while also reinvesting in workforce and career development for critical job skills required for the future."

The statement concluded: "With continued improvements and efficiencies, the company will further its strategic financial investments. Since 2021, Toyota has announced over $16 billion in new investments in our manufacturing operations to support our electrification efforts, including a new battery plant in North Carolina.”

What is Toyota offering those with 5, 10, 15 years of service?

Here's the deal, according to details in the document:

An eligible Toyota employee who completed 15 years or more of service could qualify to receive two times their annual base pay in severance, according to paperwork given to employees and obtained by the Detroit Free Press.

By contrast, the best offers made to salaried workers at Stellantis and General Motors in 2023 put up to one year of pay on the table.

Even Toyota employees with less time on the job are being offered some very good incentives to go.

A Toyota employee who qualifies would receive one and a half times their annual base pay if they had 10 years to 14 years of service.

Finally, an employee with just five to nine years of service at Toyota could qualify for a cash lump sum payment that totals one year of base pay. Tax withholding would apply, and the payout could be subject to "additional withholding under child support, alimony and other court-approved wage garnishment orders, or as otherwise required by applicable law," the document noted.

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Not everyone who applies will be accepted, according to Toyota. The "designated exit date" for when they will leave will vary and be determined by Toyota.

"Toyota is unlikely to be able to accommodate every request to participate (for example, if the number of requests exceeds expectations or business needs)," the company stated in its Dec. 11 correspondence with employees.

"Toyota will notify you if your participation request has been approved."

Many auto employees taking time to review new buyout

Financial planners have been talking to Toyota employees who live in Michigan for the past week about whether they should consider staying or going.

The size of the payouts clearly indicates a serious offer, according to Sam Huszczo, a chartered financial analyst in Southfield, who has been talking with Toyota employees in Michigan who received the offer and range in age from their mid-30s to mid-50s.

Huszczo said the Toyota terms are far more generous than a popular offer made by General Motors back in March, an offer that several GM employees viewed as the best buyout they had seen in recent years.

"People were excited about that," he said.

But giving some Toyota employees with just 15 years or more of service two years salary is clearly a lot of money, Huszczo said.

Some eligible Toyota employees that he's talked with have salaries in a range of $100,000 to $200,000 a year.

Someone who makes $200,000 a year, he said, and has been at the company a bit more than 15 years could be looking at a lump sum payout of $400,000 before taxes.

He's talked with a material engineer, a paint production engineer, a plastics engineer, employees in purchasing project management, and someone with a job in finance at Toyota so far about the voluntary severance package.

"There's a lot of people taking this seriously," Huszczo said.

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Toyota Motor North America has research and development operations in Ann Arbor and Saline that employ 1,235 people, according to Toyota's information online.

In June, Toyota announced that it would build a new automotive battery lab it its Michigan R&D headquarters in York Township to expand electrified vehicle development capability in the U.S. Operations at the new battery lab are expected to begin in 2025.

The new facility will support manufacturing operations in North Carolina and Kentucky. But Toyota does not expect to hire more people in Michigan for the facility. Instead, Toyota plans to use "existing team members in the new lab," Olivia Boisineau, Toyota spokeswoman, told the Detroit Free Press in June. "We will provide new skills training where necessary to help them make the transition."

Toyota employs some 49,000 people in the U.S, according to its website.

While the severance money is solid, many expect that some will still have a hard time deciding if it's time to leave Toyota.

"It's going to be a tough decision," Huszczo said, "even if it is in their best interest to take it."

If someone is considering retiring in a few years, the chance to get up to two years in salary, before taxes, is something that they likely will take extremely seriously. Anyone anticipating retirement, though, still needs to run carefully through their own numbers to understand their own financial challenges ahead.

Others who are younger need to judge how easily it might be to find work elsewhere.

"Someone in their finance department could find a new job pretty easily," Huszczo said.

But he's hearing more reluctance about leaving a job at a big automaker from engineers with technical skills that relate specifically to the auto industry. They're more worried about their ability to find employment elsewhere.

"If all these auto companies are downsizing, there's less jobs, so there's less demand," Huszczo said.

Even so, he said, younger employees seem to have more optimism about moving on and getting a year's salary to do so.

Yet, he said, if you don't have a pulse on the current job market in your field, you need to do more research on potential job openings.

"I wouldn't suggest just jumping in the job market and taking this cash without knowing what you're jumping into," he said.

"That money can get eaten up fast in a year."

The Toyota package does offer outplacement services to those who volunteer to leave and plan to look for new jobs and other incentives.

Allowing Toyota employees who are offered the package more than one month to make "a very big, identity, life decision" is extremely generous too, he said.

In March, General Motors made a widely reported announcement about its voluntary severance plan that offered salaried employees who had been with GM for 12 years or more a maximum of 12 months in severance pay. But those employees had just two weeks to decide to decide if they would stay or go.

The GM offer was made to a majority of the 58,000 U.S. white-collar employees at General Motors. The U.S. salaried employees had to have five years or more of service as of June 30, 2023, to be offered a buyout. A buyout offer was made to all GM global executives with at least two years of service.

GM's message earlier in 2023 was that it needed to get leaner as the industry pushes to expand electric vehicle sales. Employees were strongly encouraged to consider the program.

Financial advisers said their phones started ringing off the hook once GM told salaried workers in March about the buyout packages. But the buzz associated with another Stellantis buyout plan offered in November didn't seem as strong to some planners.

General Motors announced in April that about 5,000 salaried workers took the buyout. Most of those employees were to leave by the end of June. The numbers taking the buyouts reportedly, according to company executives, put GM in a position to avoid layoffs.

To get a one year lump sum payout at Stellantis, salaried employees had to have 20 years or more of corporate service.

At the lower end, the buyout package at Stellantis offered only three months of base pay to those with five years to nine years of service.

Others with 10 years to 14 years of service were looking at six months of pay as part of the buyout; and those with 15 years to 19 years of service were looking at nine months of pay in a lump sum.

Salaried employees interested in the Stellantis offer had until Dec. 8 to make a decision, with a separation date of Dec. 31. Stellantis employees had until Dec. 21 to revoke their election.

The Stellantis offer was made to 6,400 of its 12,700 non-bargaining U.S. salaried employees with five or more years of service. The company has not yet disclosed how many accepted the offer.

The auto industry is expected to undergo massive employment shifts as more of the world moves to electric vehicles and these sorts of buyouts remain part of the picture. Even the new UAW contracts at the Detroit Three ratified in November include a $50,000 lump-sum, pre-tax retirement incentive in 2024 for some eligible workers.

Clearly, buyouts will trigger plenty of buzz and some deals could look better than others.

Contact personal finance columnist Susan Tompor: stompor@freepress.com. Follow her on X (Twitter) @tompor.

This article originally appeared on Detroit Free Press: Toyota Motor North America buyout offer includes 2 years in pay