22 March 2006
General Motors, the United Automobile Workers and the Delphi Corporation reached a historic agreement today that would offer incentives of up to $140,000 to more than 125,000 workers at the two companies if they agree to leave their jobs.
The company did not estimate how many would accept.
G.M., the nation's largest automaker, said all 113,000 of its hourly workers in the United States would be offered packages to retire or leave. Workers who have reached retirement age would be offered $35,000 in cash to give up their jobs immediately. Meanwhile, workers with 10 years' experience who would not be eligible to retire can leave and receive payment of $140,000 and a pension, but would have to forgo health care coverage, according to an outline of the program posted on the U.A.W.'s Web site.
Delphi, the country's biggest parts supplier, said it would offer payments of $35,000 to 13,000 of its 34,000 workers in the United States who opt to depart.
Workers are not under any obligation to accept the deals, and executives and union officials have been concerned that some could wait for sweetened offers.
But Robert Betts, president of the U.A.W. local at the Delphi plant in Coopersville, Mich., said the offers were attractive. "If someone is going to give you $35,000 to take your pension, that's good," Mr. Betts said. "I think a whole lot of people are going to hit the road over this."
The deal, which requires bankruptcy court approval, did not remove the threat of a strike at Delphi, which is operating under bankruptcy protection. In a statement, Delphi said it wanted to reach a broad agreement with the U.A.W. on sharply lower wages and benefits by March 31.
Otherwise, it said it would ask a judge for permission to impose less-generous terms — a move that could trigger a walkout, which in turn would cripple G.M.
G.M. will pay the brunt of the cost, expected to be billions of dollars, another burden for the suffering auto giant, which lost more than $10 billion in 2005 as its market share in the United States fell to its lowest since 1935.
Negotiations have been going on for months between the union, G.M. and Delphi, the parts supplier that was part of G.M. until 1999. Delphi filed for bankruptcy protection last October.
G.M. was involved because thousands of workers at Delphi, which remains G.M.'s biggest supplier, have the right to return to the company. G.M. is liable for pensions and post-retirement benefits for those who worked for it before the Delphi spinoff.
In a statement, G.M.'s chief executive, Rick Wagoner, said the move was an important step in G.M.'s restructuring and that G.M. was "pleased" by the agreement.
The U.A.W. in a statement said that the agreement "required an inordinate amount of time and patience due to the complexities posed by Delphi's bankruptcy filing."
A G.M. spokeswoman, Katie McBride, said that about 36,000 G.M. workers were eligible to retire with full pension and benefits. An additional 27,000 workers are within a few years of retirement, and are being offered a special program that will them up to $2,800 a month on top of their regular pay, if they agree to retire once they have put in 30 years at the automaker, when workers can retire and receive their full retirement benefits.
Delphi, in a statement this morning, called the agreement a "critical milestone." The workers offered the cash payments comprise slightly more than half the 24,000 represented by the U.A.W., if they agree to leave the company. In all, it has about 34,000 workers in the United States.
Under the U.A.W.'s contracts with G.M. and Delphi, workers can retire after 30 years on the job. But many stay longer, because of the $27-an-hour pay and generous benefits that the union contracts provide.
Delphi said G.M. had agreed to pay the cost of the lump-sum payments for its workers, as well as cover the costs of its own retirements. Further, Delphi said G.M. had agreed to accept 5,000 Delphi workers back to the company through September 2007, when the current union contract expires.
It also said G.M. had agreed to be responsible for pensions and other post-retirement benefits for those 5,000 workers.
G.M. plans to cut 30,000 jobs through 2008, and has begun closing some of the 12 plants where it will eliminate production.
Given that, there are not likely to be jobs for the Delphi workers when they "flow back" to G.M. Unless they retire, that means some would go into a program called the Jobs Bank, where workers receive full pay and benefits until the U.A.W. contract expires next year.
The agreement marks unprecedented cooperation by the union, which has been put in the position of convincing its members to give up jobs that the U.A.W. has fought for decades to protect.
Meanwhile, Delphi said negotiations would continue on its bid for sharply lower wage and benefit rates from U.A.W. members.
Union officials said last week that Delphi would possibly hold off filing its court motion if it reached an agreement with G.M. and the U.A.W. on early retirements. But this morning, Delphi reiterated its intent to seek the court motions.
The deal comes amid difficult times for G.M. and its embattled chief executive, Rick Wagoner. Analysts say G.M.'s credibility was damaged by last week's unexpected disclosure of improper accounting. Late Thursday, G.M. increased its loss for 2005 by an additional $2 billion, to $10.6 billion, and delayed filing its annual report.
The action sparked displeasure among members of G.M.'s board, including its newest director, Jerome York, who represents billionaire Kirk Kerkorian, G.M.'s biggest individual shareholder.
Shares of G.M. were up 5 cents, to $22.05, this afternoon.
http://www.nytimes.com/2006/03/22/business/22cnd-auto.html?_r=2&oref=slogin&oref=login
