By Dee-Ann Durbin The Associated Press

DETROIT – General Motors Corp. and auto supplier Delphi Corp. promised to cut jobs to restore the health of their ailing companies. Yesterday, they kept their vows by unveiling one of the most sweeping buyout programs ever.

GM and Delphi said they plan to offer buyouts to more than 125,000 hourly workers under an agreement with the United Auto Workers. Around 113,000 GM workers will be eligible for early-retirement incentives or buyouts of between $35,000 and $140,000 depending on their years of service and whether they want to keep health care and other benefits.

At Delphi, GM’s former parts division and largest supplier, 13,000 U.S. hourly workers will be eligible for a lump sum payment of $35,000 to retire. Also, up to 5,000 Delphi workers will be eligible to return to GM.

About 80 percent of GM’s 19,000 employees in Ohio are hourly workers at plants in Moraine, Lordstown, Toledo, Mansfield, Parma, Defiance, Cincinnati and Columbus. Delphi employs about 13,000 workers in Ohio at plants in the Dayton, Warren, Columbus and Sandusky areas.

David Cole, chairman of the Center for Automotive Research and the son of a former GM president, said the deal is of historic proportions.

“It’s huge, far more than I expected,” Cole said. Cole said the deal could go a long way toward helping GM return to profitability and speeding Delphi’s exit from bankruptcy.

The number of workers covered by the GM-Delphi buyout offer is enormous, but not unprecedented. For example, in 2003, Verizon Communications Inc. made a buyout offer to 152,000 workers, about half of them unionized technicians and call center operators and the other half nonunion managers. About 21,600 of those employees accepted the deal, nearly double what the company had sought.

While the deal with the UAW would not be offered to as many workers, the dollars being offered are much richer than in most past buyouts, said John Challenger of outplacement firm Challenger, Gray ‘ Christmas Inc.

“It’s unparalleled in terms of the potential for the amount of money that will be paid out to blue collar workers,” he said.

But the agreement leaves open many questions, including what will happen to the bulk of Delphi’s 34,000 hourly workers. Delphi remains in negotiations with GM and its unions to lower its labor costs, which it puts at $75 an hour in wages and benefits, and has threatened to ask a bankruptcy judge to cancel its union contracts if it fails to settle by March 30. If the judge does cancel those contracts, the unions could call a strike that would cripple Delphi and GM.

The buyout deal comes at a critical time for GM, which increased by $2 billion its reported 2005 loss to $10.6 billion last week. The world’s largest automaker has been losing U.S. market share to Asian automakers and is saddled with labor agreements that make it difficult to close plants or cut workers. GM shares rose a penny to close at $22.01 on the New York Stock Exchange.

The plan also is crucial for Delphi, the largest U.S. auto parts supplier, which filed for Chapter 11 bankruptcy protection in October. And the plan is painful for the UAW, which also recently agreed to unprecedented cuts in retiree health care at GM and Ford Motor Co.

“There’s a cushion but it doesn’t prevent the fall,” said Harley Shaiken, a professor and labor expert at the University of California, Berkeley. “It eases the pain but it’s not the same as having the stability of a successful company.”

Under the plan, GM would pay for the Delphi early-retirement incentives and assume some post-retirement benefits for Delphi employees who go back to work for GM. GM spokesman Dan Flores said GM didn’t yet know the full cost of the plans, since it’s unclear how many workers will participate.

Himanshu Patel, an auto analyst with JPMorgan, said GM will likely pay around $2 billion for the Delphi buyouts based on recent financial filings, while Merrill Lynch analyst John Murphy estimated GM will spend “well in excess of $1 billion” on its own buyout plan.

Several analysts questioned how much GM can save, saying it will get near-term relief by cutting jobs but will add to its pension obligations. The company already has 2.5 retirees for every active worker.