GM, UAW Near Deal on Buyouts

March 18, 2006

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General Motors Corp. and the United Auto Workers are reporting progress on reaching an agreement that would offer early retirement buyouts to thousands of General Motors Corp. and Delphi Corp. workers. The agreement, however, would not eliminate the threat of a potential strike againstDelphi, which still must negotiate a new labor pact for cutting the wages of remaining workers.

The buyout agreement is not expected to require ratification by union members, though it would probably require approval by the federal bankruptcy judge overseeing Delphi’s Chapter 11 filing, which means that union members might not actually get the cash for several more months.

Paul Krell, UAW director of communications, said there was progress being made on the buyouts. “There is progress and they were planning to work over the weekend,” Krell said.

GM spokesman Dan Flores also said the talks on the buyouts are proceeding. “We’re not yet in position to say where we’re at yet,” he said. Another GM official, however, said that the negotiators were close enough that he had actually expected an agreement last week. The agreement, however, never materialized while talks continued.

David Healy of Burnham Securities also told the Associated Press that GM’s announcement last week that it would increase the amount set aside for restructuring charges showed the two sides were getting closer to some kind of an agreement.

Ron Gettelfinger, UAW president, declined last week to say whether the UAW had offered GM the Ford model, which called for buyouts of $35,000. Sean McAlinden, chief economist at the Center For Automotive Research in Ann Arbor, however, was quoted as saying that GM could be ready to offer as much as $100,000 for GM workers to retire.

GM currently has 105,000 employees and Delphi has more than 23,000 employees represented by the UAW and most them are eligible to transfer back to GM under provisions of a special agreement GM and the UAW signed in 1999. Roughly 40,000 of the employees are eligible to retire, according to estimates by the Center for Automotive Research.

Transferring several thousand Delphi employees back to GM also could open the door for a wider settlement between the union and the bankrupt Troy-based supplier.

However, unlike the buyouts, any agreement requiring concessions and altering the basic terms of the existing GM-Delphi labor pact would have to be put to a ratification vote among UAW members working in Delphi’s plant.

The UAW has gotten concession agreements ratified in the past but the Delphi bankruptcy also has spawned a feisty grassroots movement opposed to giving into Delphi’s management.

Initially, GM was thought to have sought a comprehensive deal that would neutralize the strike threat. But apparently its negotiators have now decided to concentrate instead on the buyout agreement. The shift in GM’s position was underscored by changes to GM’s 2005 financial report that increased the company’s losses by $2 billion, to $10.6 billion, and spelled out that the giant automaker has set aside additional money to cover the cost of restructuring its North American operations.

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