GM offers "Buyouts" proposal to Workers

World's largest automaker, General Motors, offered early retirement or buyouts proposal and severance packages, one of the largest buyout programs ever, to 125,000 hourly workers of General Motors Corp. and auto supplier Delphi Corp., Yesterday. The workers are being offered up to $ 140,000 each to give up their jobs to help to reduce labor costs at GM and Delphi, the bankrupt auto parts supplier.

The buy-out programs are GM's boldest move towards confronting its uncompetitive cost structure and could refuse the threat of a potentially crippling strike at Delphi. GM said that it has set a goal of cutting 30,000 hourly jobs by 2008.

The deal has come up following a week long intensive talks among the GM, Delphi and the UAW (United Auto Workers) union, in Detroit. As per the agreement, the buyouts scheme covers only GM's UAW-represented workers. They would be eligible for early-retirement incentives or buyouts of between $ 35,000 and $ 140,000, amount depending upon their years of servicing and their will to keep health care and other benefits. Salaried workers won't be getting the buyout proposal.

GM’s biggest auto parts supplier, Delphi, is also seeking to check the labor costs under a court-supervised restructuring expected to include the closure or sale of many of its 44 US plants. Whereas 13,000 Delphi hourly workers will be eligible for a lump sum payment of $ 35,000 to retire, up to 5,000 Delphi workers will be put back to General Motors.

Though the companies made no forecast as to how many employees might accept the proposal or exactly how much they would save in operating costs, yet it is believed that most of the workers would accept the proposal which include buy-outs of up to $ 140,000 each.

GM said it is also having talks with the International Union of Electronic Workers-Communications Workers of America on a similar deal.

GM has been losing US market share to Asian automakers and is burdened with labor agreements that make it difficult to close plants or cut workers. GM shares raised a bit to $ 22.01 on the New York Stock Exchange, yesterday.