35,000 take GM buyout, to retire

General Motors persuaded about 35,000 of its union workers in the U.S. to retire or leave under a cost-cutting program aimed at helping return the company to profit.

The buyouts and retirements consist of 33,800 United Auto Workers and about 1,200 workers at a separate union who have already accepted buyouts, GM said Monday.

Former GM unit Delphi said 12,600 workers took similar retirement offers. It didn't say how many accepted buyouts.

The departures mean GM will meet it goal of cutting 30,000 jobs by Jan. 1, two years ahead of schedule, and add an additional $1 billion in savings, to $8 billion, by year-end. The company expects the attrition program to cost $3.8 billion.

Chief Executive Rick Wagoner is trying to restore GM to profit after a 2005 loss of $10.6 billion.

"We're coming very rapidly on the road back," Wagoner said at a news conference in Detroit to announce the results.

GM is scaling back in North America after Asian rivals such as Toyota captured a record share of the U.S. market and sent GM's share to an 80-year low. Wagoner's plans to close 12 North American facilities will cut production by about 1 million units, on top of another reduction of 1 million units from 2002 to 2005.

The buyouts and retirements are an attempt to speed the departure of workers GM needs to shed to close plants through 2008. Factories in Oklahoma City and Lansing, Mich., have already closed.

"Broadly speaking, the more people that take this, the better," Standard & Poor's analyst Robert Schulz said before the announcement. "This is the main part of the cost reductions they're undertaking."

Workers who accepted the buyout offer by last week's deadline have until Friday to change their minds, so the final numbers may change slightly. Most of the employees who accept the offers will be gone by year's end.

If so many employees take buyouts that GM can't run all of its plants, it can hire temporary workers under a March 22 agreement with the UAW.

The temporary employees, who will be union members, are paid $18 to $19 an hour, GM spokesman Tom Wickham said. GM's union assembly wages are about $27 an hour.

GM will gain about $1.25 a share in annual earnings for every 10,000 workers who took the offers, Merrill Lynch analyst John Murphy wrote June 16. Murphy, who rates the automaker a "buy," had estimated 30,000 would leave.

GM's per-share loss was $9.55 last year.

Traditional union workers cost the company about $81 an hour last year, including benefits and retirement costs, or about $168,000 each without overtime, said Burnham Securities analyst David Healy, who doesn't rate GM. Each temporary worker costs about $39,520, he said.

Buyouts of $35,000 were offered to those still working after reaching the 30 years' service needed to retire. Those within three years of retirement eligibility would get a pension slightly less than the $36,000 for regular retirees. They'd get a full pension on the 30th anniversary of their service date.

Employees who have at least 10 years at GM and aren't eligible for early retirement were offered $140,000 buyouts. Workers with fewer than 10 years of service can get $70,000.

Those who accept the offers give up health coverage and stop accumulating benefits against GM's $170 billion pension and retiree health-care obligation.

Under current GM contracts, GM must keep paying workers even if the automaker doesn't have work for them to perform.

Delphi, GM's largest parts supplier, plans to say in July how many of its 33,000 U.S. union workers accepted similar buyout offers. The company filed for bankruptcy protection for its U.S. operations in October.

GM, Delphi and the UAW are trying to avert a strike at Delphi, whose unions have threatened to walk out if CEO Steve Miller gets bankruptcy-court approval to scrap their contracts. He wants to cut hourly pay to as low as $12.50 from about $27.