GM Offers Massive Buyout

General Motors Corp. and auto supplier Delphi Corp. announced deals with the United Auto Workers Wednesday 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.

But automotive expert Erich Merkle tells CBS News, "If you take the one-time buyout, General Motors employees would relinquish heath benefits."

"That's a pretty big tradeoff," Merkle says.

"Automotive News" editor and publisher Keith Crain tells CBS News it's a drastic step, but there's really no other choice. "It was important for Delphi, the largest American supplier, along with General Motors and the UAW to come to some agreement where they could lower their costs in terms of lower labor costs, as well as the number of workers," Crain says.

The Delphi plan must be approved by a bankruptcy court. GM's plan doesn't require approval, and company spokesman Dan Flores said retirements could begin as early as June 1.

Under the plan, GM would pay for the Delphi early-retirement incentives and also would assume some post-retirement benefits for Delphi employees who go back to work for GM. Flores said GM didn't yet know the full cost of the plan, since it's unclear how many workers will participate. But the company already has taken a $3.6 billion charge for Delphi-related expenses.

"We were expecting it to happen, but we didn't know exactly when," said Dan Fairbanks, president of United Auto Workers Local 1618 in Lansing Michigan. "I thought it might be about another week."

Fairbanks, 52, has worked for GM for 30 years and already had been looking at retirement with the closing of GM's Lansing Craft Centre, which builds the high-end, two-seat Chevrolet SSR truck.

The UAW said it planned to comment later Wednesday.

GM has a total of 113,000 hourly workers, but only UAW-represented workers are eligible for now, Flores said. The automaker is negotiating with the International Union of Electronic Workers-Communications Workers of America on a similar deal for those workers.

GM said the plan will move it toward its goal of cutting 30,000 hourly jobs by 2008.

"We said we'd be working with UAW leadership to develop an accelerated attrition program that would help us achieve needed cost reductions as rapidly as possible, while at the same time responding to the needs of our employees," GM Chairman and CEO Rick Wagoner said in a statement. "We are pleased that this agreement will help fulfill that important objective."

Delphi said it will ask the U.S. Bankruptcy Court to consider the plan April 7. It planned to file a motion seeking authority for similar early-retirement deals with its other unions, including the IUE-CWA and the United Steelworkers.

The deal comes at a critical time for GM, which increased its 2005 loss to $10.6 billion last week. The world's largest automaker has been losing U.S. market share but is saddled with labor agreements that make it difficult to close plants or cut workers.

The plan also is crucial for Delphi, the largest U.S. auto supplier, which is reorganizing in bankruptcy court after filing for Chapter 11 protection in October. The company pays U.S. hourly workers around $75 an hour in wages and benefits.

"We remain focused on the transformation of Delphi in order to emerge successfully from the Chapter 11 reorganization process and provide a strong foundation for our future," Delphi President and Chief Operating Officer Rodney O'Neal said in a statement.

"An accelerated attrition plan will help enable the transformation of our U.S. manufacturing and support operations into a much more competitive cost base," he said.

Delphi said it will continue talks with GM and its unions on a new labor agreement that would help avert a strike at Delphi. Delphi has set a March 30 deadline to reach such an agreement with its 34,000 U.S. hourly workers.