General Motors Corp., the world's largest auto company by production volume for the first 9 months of 2007, announced that by following its strategy to cut costs it has reached an agreement with the United Auto Workers on a senior workers' buyout plan.

GM is currently struggling due to the weak U.S. auto market and thus could begin making offers before Christmas instead of waiting until January 2008 as it planed in the first place, a source familiar with the negotiations told The Detroit News.

The corporation management expressed their hopes that more senior workers would take the buyout so they can be replaced with lower-paid, second-tier workers. This is a principal concession won by GM during the contract negotiations with the United Auto Workers.

General Motors is currently in the negotiation process with plant-level UAW locals, where the second-tier pay systems have yet to be agreed upon.

Under that system the pay level is established by the type of job workers have. Consequently, the jobs which are considered vital to auto-building process are at the higher wage while jobs without a high degree of importance in the building process would be at about half of the current average wage, according to The Detroit News.

So the jobs regarded as critical to the auto-building process are to stay at General Motors. The company which lost $12 billion in 2005 and 2006 said the reduction of the labor costs is a vital step if the company wants to remain competitive and manage to stay in top against the foreign competitors.

The company has offered buyouts and retirement incentives to 5,200 hourly employees. GM refused to make public its expectations regarding how many of those hourly workers will leave the program, spokesman Dan Flores said. He added that at least 34,000 GM workers left the program in 2006 either by retirement or buyout.