General Motors (GM) is offering up to $140,000 to each of its 113,000 hourly workers as incentive to leave the company—without the retiree health insurance plan that has proven to be a vast burden on the financially struggling auto maker, CNNMoney.com reports.
The offers are the company’s latest move to decrease labor costs and stem billions of dollars’ worth of losses, CNN reports.
On Wednesday, GM said it had struck an agreement with the United Auto Workers (UAW) union, though it did not mention the monetary offers, according to CNN.
A source who’s close to the deal told CNN that all UAW members employed by GM, with 10 years of employment or more, will be offered $140,000 to leave the company without the benefit of its retirement health coverage. The same source told CNN that employees with less than 10 years of service will be offered $70,000.
GM also announced a deal with bankrupt auto parts producer Delphi and the UAW to offer $35,000 to specific Delphi workers for early retirement, as well as offer jobs to 5,000 Delphi employees, CNN reports.
The auto giant holds employment guarantees with UAW members that are valid through September 2007; however, in November, GM said it planned to cut some 30,000 hourly jobs and shut down 12 plants in North America, according to CNN.
“We said we’d be working with UAW leadership to develop an accelerated attrition program that would help us achieve needed cost reductions as rapidly as possible, while at the same time responding to the needs of our employees,” said Rick Wagoner, GM’s chief executive, according to CNN. “We are pleased that this agreement will help fulfill that important objective.”
The company lost more than $10.5 billion in 2005, and executives had named compromises with the UAW and Delphi as key to returning the company to profitability, CNN reports.
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