General Motors Corp. and the auto parts supplier it once owned, Delphi Corp., announced deals with the United Auto Workers today that would offer buyouts to 13,000 hourly Delphi employees and up to 100,000 hourly GM workers represented by the United Auto Workers.
GM workers will be eligible for payouts of between $35,000 and $140,000 depending on their years of service.
At Delphi, up to 5,000 workers will be eligible to return to GM, Delphi's former parent company, while 13,000 U.S. hourly workers will be eligible for a lump sum payment of up to $35,000 to retire.
The Delphi plan must be approved by a bankruptcy court that is hearing its case. GM's plan doesn't require approval, and company spokesman Dan Flores said retirements could begin as early as June 1.
GM will pay $140,000 to any GM employee with at least 10 years' experience who agrees to quit, the UAW said. The employee would get GM pension benefits already earned and give up GM health care.
The GM Powertrain plant in the Town of Tonawanda employs about 2,500 people. Delphi employs about 3,800 at its Thermal Systems plant in Lockport.
The accord brings the parties closer to avoiding a threatened strike that analysts have said could bankrupt GM. Delphi Chief Executive Officer Steve Miller still seeks to reduce wages to $12.50 an hour from $27. He has threatened to ask a bankruptcy court judge to void labor contracts if there's no agreement by March 30.
"This is a significant step, but we still have a lot of work to do," said Delphi spokesman Lindsey Williams. "We will continue talking with our major unions and GM."
Getting workers to retire helps both GM, the world's largest automaker, and Delphi, a former subsidiary, more rapidly reach goals of cutting costs and ending losses. GM announced plans in November to eliminate 30,000 factory jobs in North America by 2008. Delphi, which declared bankruptcy Oct. 8, is trying to cut about 20,000 jobs.
In a separate statement, GM said it will offer all U.S. hourly workers some form of incentives or "other considerations" to reduce employment levels. The automaker didn't provide details. Detroit-based GM, which depends on Delphi parts to build its autos, is cutting jobs and closing plants after posting losses of $10.6 billion in 2005.
GM said Thursday that a labor agreement at Troy, Mich.- based Delphi would probably cost the automaker $5.5 billion to $12 billion on a pretax basis. The expense will probably be at the lower end of that range, GM said last week. The automaker already has set aside $3.6 billion for the costs and has twice raised its estimate of the expense since October.
Getting workers to retire early would create job openings in GM plants for idled workers from Delphi, said Sean McAlinden, an analyst at the Center for Automotive Research in Ann Arbor, Mich.
The openings might result in thousands of people leaving a "jobs bank" program that pays union members when there's no work for them. GM agreed when it spun off Delphi in 1999 to take back some workers if the parts maker became unable to give them jobs. GM also agreed to cover pension costs for former GM workers if Delphi couldn't.
GM has about 105,000 active U.S. hourly workers. The workers in the jobs bank are not included in that total.
GM has about 36,000 workers eligible to retire, and Delphi has 7,000, according to people familiar with the numbers who spoke on condition they not be identified. In addition, there are about 27,000 workers who are within three years of retirement and may be eligible for the plan, McAlinden said.
The typical employee at the Delphi plant in Lockport is 50 years old, makes $27 an hour and has worked there for 27 to 30 years, according to Frank Andrews, head of Local 686, which represents 3,200 of the workers.