Historic Union Deal Will Pare Down GM

"I just don't think that getting rid of autoworkers in America is the answer," Jordan said in an interview. "Downsizing our labor force will hurt our economy and hurt our quality in the factory."

Jordan said he fears an exodus of more senior workers who know the facilities' operations best. Another fear is that incoming workers at lower wages would feel sold out by other people in the plant. "How's it going to work if I'm working beside somebody who makes $14 an hour and I make $27," he asked.

But Melvin Davis, vice president of UAW Local 2164 in Bowling Green, Ky., and a 30-year veteran of GM, said workers have been enthusiastic about what they've heard so far. He said he is unsure if he will take a buyout until he sees the details. Also, industrial jobs in the area are hard to find, he said.

"The main thing everyone is looking at is the dollar sign," Davis said. "Overall, it seems to be a pretty good offer."

Meanwhile, Larry Jones, 52, a 28-year veteran of a GM plant in Romulus, Mich., said his acceptance of the buyout would depend on the details, which he has not seen, including whether health-care and other benefits are guaranteed.

If he takes it, he plans to become a blackjack dealer in a nearby casino. "I'd love to see a person with 30 years take the retirement so young people can get a job and get a decent income," he said, sipping a Bud Light in a Romulus bar last night.

Delphi called the deal "a critical milestone in its restructuring." The agreement could open the door to lower pay, plant closings and divestitures that will affect Delphi's remaining workers. These are all thorny areas for labor. Delphi had threatened to slash union workers' salaries to as little as $9.50 per hour from the current rate of $27 per hour. The proposal galvanized labor opposition, forcing Delphi to back off. GM was drawn into the talks because of legal and financial ties to its former subsidiary Delphi and the prospect of a strike.

Delphi said it will continue talks with GM and the UAW to resolve remaining issues. The deal outlined yesterday does not specify what Delphi workers will be paid once the supplier emerges from bankruptcy protection, a key issue for labor. Delphi said it will continue talks with the union to work for a comprehensive agreement, including the wage issue, by March 30.

If the company cannot settle with the union, it can extend the deadline for talks or ask a bankruptcy judge to throw out the existing high-wage contract and impose lower wages.

According to the Center for Automotive Research, the average age of a GM worker is 50, and many are within a few years of hitting the 30-year retirement point, if they haven't already surpassed it.

In a statement, GM chairman and chief executive Rick Wagoner said he is pleased with the deal. Wagoner has cited the resolution of the Delphi situation as a major corporate objective.

Wagoner and his team at GM have lots of other problems to untangle. GM lost $10.6 billion last year and is in the midst of a vast overhaul of its North American manufacturing operation. GM is wrestling with an ongoing government accounting investigation, important new-vehicle launches and the complicated sale of its GMAC financing subsidiary.

GM has been hounded by financial analysts and investors who are pressing for faster change at the automaker. Some have predicted bankruptcy for GM if its many problems aren't solved.

GM is heavily dependent on Delphi parts. For example, Delphi supplies heating and air-conditioning units for GM's full-size sport-utility vehicles, the success of which are key to GM's ability to reverse steep financial losses. In recent years, GM executives working closely with UAW leaders have defused problems that could have blown up into strikes.

Charles Craver, professor of labor and employment law at George Washington University, called yesterday's deal a temporary slowdown in a "rush to the bottom" for the cheapest labor. He said that in the long run, GM and Delphi will have to start laying people off.

Craver said U.S. industrial companies are in dire straits because health-care and retirement costs in the U.S. are so high. "We have to do something that will help fill that gap and alleviate the huge amount of pressure on private employers," Craver said.

Staff writers Neil Irwin, Dale Russakoff and Dana Hedgpeth contributed to this report. Russakoff contributed from New Jersey and Hedgpeth from Michigan.