Union busters! Trying to cut $27/hr to $16/hr or $12/hr. plus perks.
Delphi to Ask Court to Void Union Deals By DEE-ANN DURBIN, AP Auto Writer
4 minutes ago
DETROIT - Auto parts supplier Delphi Corp. said it will ask a federal bankruptcy court on Friday to void its labor contracts as part of a controversial restructuring that calls for layoffs of up to 8,500 salaried workers and the sale or closure of 21 of its 29 U.S. plants.
The moves carry huge risks: It may lead to a strike by unionized workers at Delphi that could cripple the U.S. auto industry and push General Motors Corp., its former parent and largest customer, closer to Chapter 11 bankruptcy.
GM accounted for around half of Delphi's $29 billion in revenues in 2004. The world's largest automaker already is struggling with declining U.S. market share and spiraling costs and is in the midst of its own restructuring. But a strike would hurt other companies and smaller suppliers as well, since Delphi supplies every major automaker, including Ford Motor Co. and Nissan Motor Co.
Delphi, the largest U.S. auto supplier, is filing a separate motion asking the court to reject some unprofitable contracts with GM. Delphi also said it will freeze its hourly and salaried pension programs later this year and move employees into a defined-contribution plan.
"We are clearly focused on Delphi's future," Delphi Chairman and CEO Robert S. "Steve" Miller said in a statement. "Emergence from the Chapter 11 process in the U.S. requires that we make difficult, yet necessary, decisions.
The United Auto Workers responded by saying Delphi was misusing the bankruptcy procedure in a way that should be "a concern for every American" and had never been serious about negotiating with its unions.
Troy-based Delphi filed for bankruptcy in October. The company said it intends to emerge from bankruptcy during the first half of 2007. Delphi said it wants to exit certain product lines and sell or close noncore plants by 2008.
Delphi's motion to void its labor contracts was widely expected; the company had delayed similar motions three times before. The company says it was saddled with uncompetitive labor agreements when it was spun off from GM in 1999 and wants to cut the wages of its 34,000 U.S. hourly workers as part of its restructuring.
Delphi, GM and its unions spent months negotiating but were unable to reach a wage agreement. Under its most recent proposal, which was rejected by the UAW and other unions, Delphi proposed dropping pay for current hourly workers to $22 per hour from $27 per hour through September 2007, then to $16.50 an hour, but that would include a one-time payment of $50,000.
The UAW criticized Delphi's filing on Friday.
"Delphi's misuse of the bankruptcy procedure to circumvent the collective bargaining process and slash jobs and wages and drastically reduce health care, retirement and other hard-won benefits or eliminate them altogether is a travesty and a concern for every American," the union said in a statement.
GM said Delphi's motion to reject its GM contracts was a common practice for companies in Chapter 11.
"We disagree with Delphi's approach but we anticipated that this step might be taken," Rick Wagoner, GM's chairman and chief executive officer, said in a statement. "GM expects Delphi to honor its public commitments to avoid any disruption to GM operations."
Delphi said it plans to keep negotiating with GM and its unions even though the motion has been filed, and some analysts have said the added urgency could help the parties reach a deal.
Judge Robert Drain has scheduled a hearing on Delphi's request for May 9-10 and won't decide whether to void Delphi's contracts until after that hearing. If Drain does decide to allow Delphi to void its contracts and Delphi takes that step, the UAW and other unions have threatened to strike.
Delphi said it also plans to cut 25 percent of its salaried work force, or around 8,500 workers, including up to 40 percent of its corporate officers. Delphi said that measure should save $450 million per year.
The company has identified eight U.S. plants that are considered critical to its U.S. operations. They are located in Brookhaven, Miss; Clinton, Miss.; Grand Rapids, Mich.; Kokomo, Ind.; Lockport, N.Y.; Rochester, N.Y.; Warren, Ohio; and Vandalia, Ohio. Delphi said those plants will focus on product lines such as safety features, electronics, diesel and gas powertrains and climate control products.
Twenty-one other plants that do not make core products — including those that make brakes and chassis, instrument panels, door modules and steering components — will be sold or closed. Delphi said it will provide further details on those plants in its filing, but they include plants in Dayton, Ohio, Saginaw and Flint.
"We believe many of these product lines have the potential to compete successfully under new ownership that has the resources and capital to invest in them," Delphi President and Chief Operating Officer Rodney O'Neal said in a statement.
Delphi said it will ask the court to reject unprofitable contracts with GM. The initial motion covers around half of Delphi's annual volume with GM. Delphi said the judge is expected to consider the motion on May 12, which gives both companies time to continue negotiating prices.
"We simply cannot continue to sell products at a loss," Miller said.
In addition, Delphi sent a letter to GM Friday that will begin the process of resetting terms for more than 425 commercial agreements that have expired since Delphi filed for bankruptcy. Those terms will be negotiated outside of bankruptcy court.
Delphi also said it will freeze pension benefits for hourly workers on Oct. 1 and for salaried workers on Jan. 1 and will replace them with plans that require employee contributions with company matches. Workers will still have access to any accrued benefits.
The company may ask for relief from the Pension Benefit Guaranty Corp., the Internal Revenue Service and possibly Congress so that when it emerges from bankruptcy protection it won't immediately owe billions of dollars to its underfunded pension plan. The company expects it will take at least six years to fully fund its pension plan.
Despite unions' fury at Delphi's wage proposals, Delphi said it is encouraged by its progress in negotiations so far and hopes to reach an agreement outside of court. GM's cooperation in a settlement is key, since Delphi would depend on GM, its largest customer, to supplement its wage offer or provide benefits. For example, in Delphi's latest proposal, wages would fall to $12.50 an hour if they weren't supplemented by GM, the UAW said. GM has said a Delphi settlement could cost it between $5.5 billion and $12 billion.
Delphi, GM and the UAW did agree last week to a buyout offer for approximately 17,000 U.S. hourly workers. Under that agreement, 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. |
