General Motors Corp will offer buyouts or early retirements to all 74,000 U.S. hourly workers represented by the United Auto Workers in a sweeping deal with the union intended to clear the way for GM to hire lower-cost replacements.

The cost-saving agreement follows a program launched in January for about 5,200 workers at GM's service parts and operations facilities across the United States and five other facilities, and comes with better terms than GM offered to UAW workers in 2006.

GM representatives said it would take weeks to introduce the complicated buyout offers to its workers, who will have 45 days to consider them and then seven days to reconsider. It expects to complete the voluntary program by July 1.

The benefits of the workforce transformation plan will start to hit GM later this year and into '09, Chief Financial Officer Fritz Henderson told reporters on Tuesday.

The costs of the buyout program will begin to accrue to GM in the first half of 2008 as the workers opt for one of the programs, Henderson said.

GM's agreement with the UAW follows similar deals the union reached with Ford Motor Co and Chrysler LLC following the 2007 contracts that allow U.S. car makers to hire many workers at lower wages and benefits, while guaranteeing some jobs.

GM executives have said the automaker will take advantage of a ground-breaking contract provision that will allow the automaker to hire workers at second-tier wages, but they have declined to say how many of the current workers who take the offers will be replaced.

GM said it would offer better terms and more choices for its already-retirement-eligible UAW workers, including increasing payouts to $45,000 for production workers and $62,500 for skilled trades workers.

The automaker had offered $35,000 cash across the board in 2006 for its retirement-eligible workers, but Ford and Chrysler recently increased their retirement incentives for hourly workers and the U.S. economy has weakened since 2006.

Workers may choose a lump-sum payment, an annuity, or roll part or all of it into an individual retirement account or a 401K to postpone the tax hit and potentially make the offer worth much more than those on offer for UAW workers at Ford.

GM factory workers who retire after 30 years currently have pensions of about $3,100 per month, plus health benefits.

The company also has lowered the eligibility for an enhanced retirement program for workers with 26 years experience who will be allowed to take what amounts to a reduced pension for four years before entering full retirement.

GM workers who are over 50 with at least 10 years experience may retire with reduced pensions, plus benefits.

UAW workers with more than 10 years experience also could opt for a $140,000 lump-sum buyout to leave with only their accrued pensions, or $70,000 if they have less than 10 years.

GM does not plan to release a target for the number of workers it expects to participate. It plans to release a final figure when the program is completed, possibly in July, representatives said.

The deals for GM's workers differ from Ford's and Chrysler's in part because of the differing ages of the work forces and company objectives. More than 34,000 workers left GM after accepting buyout packages that ranged from $35,000 to as much as $140,000 in 2006.

The buyout offers from the U.S.-based automakers come amid concerns about the strength of the U.S. economy and the possibility that U.S. industry light vehicle sales could slump more in 2008, after a drop in 2007.

Top executives of GM, Ford and Chrysler all have said in recent weeks that they would take further restructuring actions if necessary because of economic conditions.

All three automakers reached agreements with the UAW that would allow them to hire new workers for some jobs starting at $14 per hour, or about half the current average hourly wage.

U.S. automakers have been cutting capacity to match their declines in market share and their new UAW contracts allow them to shift their union retiree health-care obligations to union-controlled trusts.

(Editing by Braden Reddall)

General motors Ford Motor Company