For March 22, 2006
From the newsroom of Automotive News
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PRESS RELEASE: Delphi, UAW and GM Agree On Hourly Special Attrition Plan
13,000 Employees Potentially Eligible for Proposed Special Retirements; GM to Provide Financial Support and Accept 5,000 Flowbacks

TROY, Mich. -- Delphi Corp. today announced a critical milestone in its restructuring. The company has reached agreement with the UAW and General Motors Corp. on a special hourly attrition plan, including the opportunity for UAW-represented Delphi employees to retire from GM. GM has agreed to provide substantial financial support under the proposed plan. The plan enables a more rapid transformation to a reduced labor cost structure across Delphi's U.S. manufacturing operations. While subject to bankruptcy court approval, the plan provides financial incentives for certain types of retirements to ease the transition into retirement and permits the flow of up to 5,000 UAW- represented Delphi employees to employment with GM.

"We remain focused on the transformation of Delphi in order to emerge successfully from the Chapter 11 reorganization process and provide a strong foundation for our future," said Delphi President and Chief Operating Officer Rodney O'Neal. "An accelerated attrition plan will help enable the transformation of our U.S. manufacturing and support operations into a much more competitive cost base."

The proposed plan for eligible U.S. hourly employees includes normal and early retirements and UAW flowbacks to openings at General Motors facilities. Eligible UAW-represented Delphi employees may elect to retire from Delphi or flow to and retire from GM.

Approximately 13,000 hourly union-represented employees may be eligible to participate in the plan. Certain eligible U.S. hourly employees may be offered a lump sum payment of $35,000 to retire. 5,000 UAW-represented employees will have the opportunity to flowback to GM through the end of September 2007.

Under the proposed plan, GM has agreed to assume the financial obligations related to the lump sum payments to be made to eligible Delphi U.S. hourly employees accepting normal or voluntary retirement incentives and certain post-retirement employee benefit obligations related to Delphi employees who flow to GM under the plan.

The company said the plan is subject to a number of conditions, including approval by the U.S. Bankruptcy Court, which Delphi will seek to have heard at the April 7 omnibus hearing. A motion seeking approval of the plan and authority for similar plans for IUE-CWA, USW and other represented hourly employees will be filed with the Bankruptcy Court later today, and a report regarding the plan agreement will be filed on Form 8-K with the Securities and Exchange Commission.

Delphi will continue talks in an effort to achieve a comprehensive agreement no later than March 30, 2006. Absent agreement with all parties, Delphi will file no later than March 31, 2006 its motion under Sections 1113 and 1114 of the U.S. Bankruptcy Code to initiate the process of seeking court authorization to reject the collective bargaining agreements and terminate hourly post-retirement health care plans and life insurance.

Delphi filed for Chapter 11 reorganization of its operations in the United States on Oct. 8, 2005 in the U.S. Bankruptcy Court of the Southern District of New York and under the jurisdiction of Judge Robert Drain.

By Chris Isidore, CNNMoney senior writer
March 22, 2006: 10:08 AM EST


NEW YORK (CNNMoney.com) - General Motors Corp. is offering its hourly workers as much as $140,000 each to leave the company as the embattled automaker made its latest effort to cut labor costs and end billions of dollars in losses.

GM announced an agreement with the United Auto Workers union Wednesday, although it did not give the details of the offer being made to all 113,000 U.S. hourly employees. But a source familiar with terms of the offer confirms those UAW members with 10 years or more service with the automaker will get $140,000 if they agree to forsake the retiree health care coverage that has become a crippling burden for GM.

Those with less than 10 years service time will get $70,000 if they leave without the health care coverage.

The company also announced a much anticipated agreement Wednesday with bankrupt auto parts maker Delphi and the United Auto Workers that is seen as a key to avoiding a crippling strike at that key supplier.

GM (Research) will pay certain Delphi employees $35,000 to retire early and offer jobs at GM to 5,000 Delphi employees, according to a statement from Delphi (Research). GM hourly employees who are eligible for retirement are also being offered $35,000 to retire early.

GM has job guarantees with the UAW members that run through September 2007, but it announced plans in November to close a dozen plants and facilities and trim 30,000 hourly jobs in North America.

"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 a statement from GM Chairman and CEO Rick Wagoner. "We are pleased that this agreement will help fulfill that important objective."

GM lost $10.6 billion in 2005 and its executives have not said when they expect it to return to profitability. They have said an agreement with Delphi as well as an agreement with the UAW to cut its own labor costs were keys to that return to black ink.

GM also has contract obligations to the union members at Delphi, which it spun off in 1999. It said those costs could have gone as high as $12 billion, though last week it said the cost would likely be closer to the $5.5 billion pre-tax charge it took in the fourth quarter.

GM announced Wednesday it will take additional charges this year as part of the new offer.

Besides those contract obligations, GM had an incentive to help Delphi trim its labor costs to avoid a potentially crippling strike by the union at the parts maker, which is still GM's largest supplier. Delphi executives had demanded deep concessions from the union and set a March 30 deadline for a cost-cutting deal, threatening to go to the bankruptcy court to have its labor deals thrown out without an agreement. The union had threatened a strike if Delphi had taken that step.

"An accelerated attrition plan will help enable the transformation of our U.S. manufacturing and support operations into a much more competitive cost base," said a statement from Delphi Chief Operating Officer Rodney O'Neal.

Delphi said that it will continue talks in an effort to achieve a comprehensive agreement with the UAW and other unions at Delphi. But the three-way agreement is generally seen as clearing way for those new labor pacts.

It will present the agreement with GM and the UAW on the early retirement and the return of 5,000 UAW members to the autoworker to the bankruptcy court on April 7.