GM, Delphi,UAW reveal buyout agreement

General Motors Corp. and bankrupt auto supplier Delphi Corp. unveiled a deal today with the United Auto Workers to offer early retirement packages to thousands of factory workers as part of far-reaching plans to downsize the companies.

GM, which is trying revive its North American auto business after posting a $10.6 billion loss in 2005, said the retirement offers will be made to all 113,000 GM hourly employees and select UAW-represented members at Delphi’s hourly work force. Delphi has about 24,000 UAW hourly workers.

Under the plan, certain employees will be offered a $35,000 lump-sum payment to retire and 5,000 UAW-represented employees at Delphi will be able to return to GM through the end of September 2007, Delphi said.

Workers with a minimum of 10 years service at either company will be offered buyouts of $140,000, as well as accrued pension benefits, but would forgo all other benefits. Workers with less than 10 years have access to a $70,000 buyout, the UAW said.

The plan will be offered immediately and is a critical part of GM’s plan to cut 30,000 U.S. jobs by 2008 and Delphi’s effort to emerge from bankruptcy next year. It also greatly reduces the chance of a strike at Delphi, which would hamper GM immediately.

GM shares, which have slumped over the last year as the automaker’s financial woes have mounted, rose 2 percent to $22.46 in late morning trading on the New York Stock Exchange.

GM Chairman Rick Wagoner called the agreement a key step in the automaker’s North American turnaround.

“We are pleased that this agreement will help fulfill that important objective. In addition, the agreement will enhance the prospects for GM, the UAW and Delphi to reach a broad-based consensual resolution of the Delphi restructuring,” he said in a statement.

GM will record all charges related to the retirement plan in 2006.

When Delphi filed for bankruptcy protection in October, GM initially said its liability to former workers at the supplier could be as little as nothing.

Earlier this month, the automaker estimated its obligations to Delphi workers under the 1999 spin-off agreement could range from $5.5 billion to $12 billion, with the figure likely to fall in the lower end of that range.

With the deal, Delphi will take a major step in reducing its labor costs, one of its main objectives for entering chapter 11. The supplier has 33,000 U.S. hourly employees.

Under bankruptcy, the supplier plans to divest certain businesses and reduce the size of its U.S. manufacturing footprint. As part of the downsizing, it also has sought to reduce its $27 per hour factory wages by 60 percent and cut worker 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 Wednesday.

Last month, Delphi said it will ask U.S. Bankruptcy Judge Robert Drain on March 31 to begin the process of voiding its labor contracts if its unions do not accept wage and benefit cuts by the end of the month. But it is unclear whether the supplier will stick to the schedule now that it has achieved a breakthrough in the negotiations that answers many of its labor cost issues.

Delphi said approximately 13,000 of its hourly union-represented workers may be eligible to participate in the retirement plan.

GM said all of its 113,000 U.S. hourly workers may participate.

The agreement is also subject to approval of the New York bankruptcy court overseeing Delphi’s chapter 11 proceedings, the companies said.