Questions Surround GM Buyout Offer

How will General Motors and Delphi workers fare under a new agreement to offer them early retirement packages? The companies announced the plan, negotiated with the United Auto Workers union and covering 100,000 employees, earlier this week.

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And General Motors, plus its former subsidiary Delphi, have announced a deal to offer more than a hundred thousand of their U.S. autoworkers incentives to retire early or leave early.

NPR's Jack Speer reports there are a lot of questions involving the buyout.

JACK SPEER reporting:

Let's start with the fact that almost all sides agree the deal announced this week between GM, Delphi, and the United Autoworkers Union, represents an important milestone. However...

Mr. HARRY KATZ (Dean of the School of Industrial and Labor Relations at Cornell University): What happens in the long run to Delphi and GM and the UAW is still very much up in the air.

SPEER: Harry Katz is dean of the school of Industrial and Labor Relations at Cornell. He says the GM-initiated buyout program will help Delphi in the near-term.

Mr. KATZ: The company has more breathing room in the sense that it can now further shrink its workforce. It doesn't solve the fundamental economic challenges facing the company.

SPEER: And the list of challenges facing Delphi is pretty daunting. Delphi is in bankruptcy, and if there's no deal with its unions on wage and benefit concessions, the CEO of the company, Steve Miller, has threatened to ask the court to void the current labor agreement. The UAW counters it will strike if that happens.

Sean McAlinden is chief economist at the Center for Automotive Research. He doesn't necessarily expect a walkout, though he says things could get ugly; especially for those who can't, or won't, take advantage of the incentive offers.

Mr. SEAN MCALINDEN (Chief Economist at the Center for Automotive Research): We really only saw a list of carrots, you know, the good things in the buyout. And really there's another side of the deal, and that's for the workers that stay behind at Delphi, you know, the 8,000 or so that weren't offered this deal, what wages and benefits will they be working at a few months from now?

SPEER: From Delphi's current level of wage and benefits of around $65 dollars an hour, Miller has said he needs to reduce that by as much as 60% if the company is to remain competitive. Though given GM's willingness to help Delphi, Miller may decide this is not the time to force the issue.

Again, Sean McAlinden.

Mr. MCALINDEN: GM's offering to basically retire or transfer 18,000 of its most expensive production workers. They've opened their checkbook to solve his competitive problems. They've also held off on his prices this year. There's no reason why Mr. Miller would try to cause any trouble.

SPEER: And why is GM being so generous? After all, Delphi is an independent company.

Because Delphi is still GM's number one parts supplier, and a strike at Delphi would be a disaster for GM.

George Magliano is an analyst at Global Insight.

Mr. GEORGE MAGLIANO (Director of Automotive Research, Global Insight): The possibility of the strike now at the end of the month is very low. I mean, this is going to go on here for a couple of years at least, and especially going towards the renegotiation of the union contracts next year. I mean, something else can happen, but it really diffuses a big bomb right now.

SPEER: By the time the UAW contract expires next year, it's expected both the automaker and its former parts subsidiary, Delphi, will have shrunk to a size more in line with their share of the auto market.

Jack Speer, NPR News.

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