From financialwire.net

The massive buyout at General Motors and its former parts division, Delphi, combined with the expected increase in buyouts by Ford, could transform the shape of American automotive companies. This would eventually result in a stronger overall industry but weaker unions and higher prices for the consumer.

While it's impossible to know how many employees will accept GM's offers of between $35,000 and $140,000, 113,000 employees have received the buyout option. A further 17,000 employees could take a $35,000 payment at Delphi.

The plan is part of GM's larger strategy to cut 30,000 jobs by 2008. Experts predict a glut of automotive workers aged between 40-60 will find themselves retired, despite many years of potential productivity left.

GM is in the midst of legal proceedings designed to make retirees pay a larger part of their health care costs. If successful, those workers taking the buyout could see their pensions and health benefits substantially eroded after they retire.

As the domestic auto industry continues to struggle, more buyout programs are expected, especially from Ford which has already offered buyouts to 15,400 employees. While Ford avoided the massive losses suffered by GM, the company faces the same problems regarding overcapacity and high health care costs.

Such actions would substantially impact the power of the United Auto Workers (UAW) union. The UAW had 1.6 million members at its peak, but its roster fell to 622,000 in 2004. Foreign auto companies such as Toyota have substantially increased their workforces in the U.S., driving up the number of non-unionized workers. Only 35 percent of workers in the auto industry are currently unionized, down from 65 percent in the 1970s.

GM's move is considered positive for the larger industry as it will help reduce the companies over capacity problems. If GM can match production to demand, it can begin to raise sticker prices and end the costly incentives that have driven domestic manufactures recently.

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