Will Buyout Plan Revive GM?

(CBS/AP)  More than 125,000 hourly workers of General Motors Corp. and auto supplier Delphi Corp. are being offered buyouts or early retirement to help cut hefty labor costs. But industry analysts warned that the plan released Wednesday may not be enough to restore the companies' financial health or avoid a paralyzing strike.

While workers will keep their vested pensions, employees who accept the buyout will lose future health and life insurance benefits, CBS News correspondent Trish Regan reports.

Under the program, about 113,000 GM workers will be eligible for early retirement incentives or buyouts of $35,000 to $140,000, depending on their years of service and whether they want to keep health care and other benefits. At Delphi, GM's former parts division and largest supplier, 13,000 U.S. hourly workers will be eligible for a lump sum payment of $35,000 to retire. Also, up to 5,000 Delphi workers will be eligible to return to GM.

About 80 percent of GM's 19,000 employees in Ohio are hourly workers at plants in Moraine, Lordstown, Toledo, Mansfield, Parma, Defiance, Cincinnati and Columbus. Delphi employs about 13,000 workers in Ohio at plants in the Dayton, Warren, Columbus and Sandusky areas.

Wednesday's deal marks a major concession by union workers to help GM survive and overcome its crushing obligations, but it comes with no guarantee, Regan reports.

Union workers are represented by the UAW, the International Union of Electronic Workers-Communications Workers of America and the United Steelworkers Union.

The deal comes at a critical time for GM, which last week increased its reported loss for 2005 by $2 billion, to $10.6 billion. The world's largest automaker has been losing U.S. market share to Asian automakers and is saddled with labor agreements that make it difficult to close plants or cut workers. The plan also is crucial for Delphi, the largest U.S. auto parts supplier, which is reorganizing in bankruptcy court after filing for Chapter 11 protection in October.

The companies made no predictions of how many employees might accept the offers or exactly how much they would save in operating costs. GM has a goal of cutting 30,000 hourly jobs by 2008.

Under the plan, GM would pay for the Delphi early-retirement incentives and assume some post-retirement benefits for Delphi employees who go back to work for GM. GM spokesman Dan Flores said the automaker didn't yet know the full cost of the plans, since it's unclear how many workers will participate.

Keith Crain, editor and publisher of Automotive News, told CBS Evening News anchor Bob Schieffer that GM wasn't to go bankrupt. "I don't think General Motors is about to go broke by a long shot. But make no mistake, this a watershed day for GM and for the auto industry.

"The United Auto Workers, who are used to getting probably the best benefit packages, the best salaries in the nation — today their leaders agreed to roll back those benefits, roll back those pay scales to a much more reasonable level, and that's unheard of."

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