General Motors, the world's largest car maker, has taken several large steps in its bid to avert bankruptcy, after striking deals with its biggest union.
The company agreed with its collapsed former subsidiary Delphi, a vital components supplier, to fund redundancies at the company and to take back up to 5,000 Delphi employees.
And it has also won the agreement of the United Auto Workers over the terms of up to 35,000 redundancies at GM itself.
Motor industry analysts said that the progress proved talks between the three parties continue to be constructive, reducing the likelihood of a crippling strike at GM or Delphi.
GM has said it is facing the most difficult period in its 100-year history, as consumers shun its cars in favour of Asian models. The company is also being undercut by rivals manufacturing in the less-unionised areas away from GM's Detroit heartland. It slumped to an $8.6bn loss last year, and Wall Street is demanding a drastic restructuring and big concessions from the powerful labour unions. It is has cut its dividend in half and is trying to sell its car finance arm.
Analysts have predicted that a strike at Delphi, which could halt production at many GM plants, could be enough to push GM into bankruptcy.
Delphi, which is already in bankruptcy protection, needs court approval for yesterday's deal, which would see up to 13,000 employees offered redundancy.
Meanwhile, GM employees will receive between $35,000 and $140,000 to leave the company, depending on their length of service and the level of retirement benefits they agree to give up.
GM shares initially rallied on the twin agreements, although some analysts expressed caution. Rebecca Lindland of Global Insight said: "This is a voluntary buy-out, and different companies have had very different experiences of take-up."
Delphi set a deadline of 30 March for a final agreement with the UAW on a new labour agreement. The company wants to cut hourly wages by more than 50 per cent, and said that it would apply for court approval to tear up the existing contract unless an agreement was reached by the deadline.
Last month, Rick Wagoner, GM's chief executive, accepted a 50 per cent cut to his $2.2m annual salary, and other boardroom pay was also cut.Reuse content