General Motors and beleaguered auto supplier Delphi Corp. have reached a deal with the UAW that will allow the automaker and supplier to cut tens of thousands of jobs.
GM will pay most of the costs associated with the deal. The ailing automaker said it would account for the costs this year but did not give an estimate of those costs.
Together, GM and Delphi will offer buyouts to more than 125,000 hourly workers -- many of whom are eligible to retire based on age or years of service or who are within a couple of years of qualifying for retirement. Delphi was a subsidiary of GM until 1999.
The buyout offers start at $35,000 for GM and Delphi workers who already are eligible to retire and collect their full retirement benefits. GM workers who have at least 10 years of service and agree to give up all retirement benefits except vested pension, can get up to $140,000. GM will pay the buyout costs for Delphi workers who leave.
The buyout program, which has taken weeks of intensive negotiation involving GM, Delphi and the UAW, is aimed at helping Delphi shed thousands of high-wage workers during its Chapter 11 reorganization. Delphi filed for Chapter 11 last October
-Under the terms of the deal:
--13,000 of Delphi's 23,000 UAW-represented workers will be offered $35,000 to retire. The payments would be made by GM. If all eligible workers took the deal, the cost would be $455 million. Delphi has about 33,000 union-represented workers. The workers will have a choice to retire from Delphi or flow back to GM before retiring.
--Workers are eligible for the buyout if they have 30 years of service or are 65 years old, or if the combination of their age and years of service equals at least 85, a Delphi spokesman said.
--As many as 5,000 additional Delphi workers can transfer back to GM's payroll by September 2007. Delphi said GM will pick up the cost of retirement benefits of Delphi workers who return to GM.
--GM and Delphi workers who have at least 27 years of service but less than 30 years will be offered a monthly payment to leave their jobs. The payments continue until the worker reaches 30 years of service, when he or she must retire. Workers with 27 years would get $2,800 a month; workers with 28 years of service would get $2,850 a month; and workers with 29 years of service would get $2,900 a month.
--GM workers with at least 10 years of service will be offered a $140,000 lump-sum payment to leave the company and give up retirement benefits, including health care. The employee would keep any vested pension benefits. GM workers with less than 10 years of service will be offered a $70,000 buyout, with the same terms.
GM said it will offer the buyout incentive to all its 113,000 hourly factory workers. Of that total, about 36,000 workers are eligible to retire under the current UAW contract, GM said. Another 27,000 workers have nearly 30 years of service, GM said. The automaker has previously announced a goal of cutting 30,000 jobs by 2008.
Delphi said it will file a motion Wednesday with the U.S. Bankruptcy Court for the Southern District of New York to approve the buyout for its UAW workers. The supplier also is negotiating with its other unions, including the IUE-CWA and United Steelworkers, on a similar buyout program.
The supplier says it is still negotiating with its unions to establish a new labor contract. Once again, Delphi said it would ask the court to void current labor contracts if a deal is not reached by March 30.
Facts about the early retirement incentives offered by GM and Delphi:
-GM has 113,00 hourly workers represented by the UAW. Of the total, 36,000 GM workers are currently eligible to retire with 30 years service. All GM workers will be offered buyout options under the program. Another 13,000 Delphi workers are eligible for buyouts.
-Any UAW worker already eligible for retirement who leaves GM or Delphi will be given an additional lump sum payment of $35,000. That offer is retroactive to Oct. 1, 2005.
-GM employees with more than 10 years of service can take $140,000 to sever all ties with the automaker including health care and post-retirement benefits. Hourly workers with less than 10 years seniority will be offered a one-time payment of $70,000 under the same terms.
-Workers with at least 27 years of experience will be offered payments of up to $2,900 to cover each of the remaining months until they have vested with a full 30-year pension.
-GM will take back 5,000 Delphi hourly workers by Sept.1, 2007. That target date may be extended by mutual agreement of UAW, GM, Delphi.
-The agreement is subject to court approval because of Delphi's bankruptcy filing.
-GM and Delphi will use temporary employees to fill any operational gaps created by the buyouts. Seniority will dictate who is eligible for buyouts if there are too many who accept in a given plant.
-GM estimates its exposure to Delphi between $5.5 billion and $12 billion before taxes.
-JPMorgan analyst Himanshu Patel estimates it will cost GM $2 billion for the Delphi employee buyouts
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