American Axle & Manufacturing Holdings is to offer buyout and early retirement to about 650 workers at a plant in Buffalo, New York state.

The so-called 'voluntary separation programme' is being offered to all hourly workers represented by the United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) at the Buffalo gear, axle & linkage facility.

The programme begins next month and is related to AAM's previously announced plans to close a portion of its US production capacity dedicated to mid-sized light trucks.

Under the Buffalo Separation Programme (BSP), AAM offers include a monthly incentive for workers eligible for retirement within four years; a $US50,000 incentive to retirement-eligible workers; a $70,000 buy-out incentive to workers with less than 10 years seniority; a $100,000 buy-out incentive to associates with 10 or more years' seniority, and early retirement for workers with 10 or more years of service aged 50 to under 65.

Those who retire as part of the BSP will retain all pension and other post-retirement benefits. Workers who accept a buy-out will retain pensions but forfeit other benefits.

AAM expects to incur special charges of as much as $85m for the programme, including pension and other post-retirement benefit curtailments and special termination benefits, but has withdrawn its 2007 earnings and cash flow guidance due to the uncertainty of acceptance rates and the amount of pension and other postretirement benefit charges related to the voluntary programme.