Delphi, Uaw Close to Reaching Agreement
Recuperating auto parts manufacturer Delphi Corp. is so close to reaching a wage-and-benefit agreement with the United Auto Workers (UAW). Union officials said that they were told today to prepare for a ratification vote soon.
UAW President Ron Gettelfinger and Vice President Cal Rapson, speaking before local union officials in Detroit, said that they want to finish with Delphi before July 23, the official start of national contract talks between the UAW and Detroit’s three automakers, three local union presidents who attended the meeting said last Tuesday.
The presidents, who spoke on condition of anonymity because they were not authorized to articulate for the union, stressed that Delphi and the General Motors Corp., its former parent, will begin a two-week plant shutdown starting on the first of July, so any agreement likely would have to be voted on by the end of June while plants are still open.
One of the presidents said after the meeting that they were told a deal could happen in the “next couple of days.” UAW spokesman Roger Kerson declined to comment Tuesday. Delphi spokesman Lindsey Williams also declined to comment on the negotiations other than to say discussions continue with the UAW and Delphi’s other unions.
Gettelfinger and Rapson cautioned that no agreement had been finalized, the presidents said. The statements were delivered at a gathering of GM local union officials and Delphi preparing for the forthcoming national contract discussions.
The meeting was participated by local presidents, shop chairmen and top union and GM officials. GM officials said that the company’s turnaround plan was beginning to take hold and explained how its costs are higher than Asian competitors, one of the presidents said. Meanwhile, the local presidents said that the wage agreement is similar to a supplemental contract agreed to in the spring of 2004 that pays newly hired workers $14 per hour, with three percent increases every six months until they reach as high as $18.50. Older workers at Delphi make a base wage of about $27 per hour.
The agreement would apply to all Delphi workers, but workers with seniority rights could get a lump sum payment from the Detroit-based automaker and have the option of retiring, working for less money or returning to GM if jobs are available, the local union presidents said.
Troy-based Delphi, GM’s former auto parts arm that was spun off as a separate company in 1999, has said that it needs a lower wage scale and other changes to compete against companies with cheaper labor costs. Since October 2005, the auto parts company has been operating under Chapter 11 bankruptcy protection. It has sought bankruptcy court permission to void its labor contracts, but said that it would rather reach a consensual wage and benefit agreement with its unions.
Delphi, which reported $533 million loss in the first quarter and $5.5 billion in the previous year, requires a settlement with its unions before private equity firms will invest up to $3.4 billion needed to emerge from Chapter 11 later this year.
GM is involved in the discussions because it is on the hook for an estimated $7 billion in liabilities for Delphi pension and retiree health care expenses. In a current regulatory filing, the automaker estimated that its labor expenses for Delphi include another $500 million when it emerges from bankruptcy protection and $300 million to $400 million for several more years.
The largest American automaker also estimates that it will have to make an undetermined number of annual transitional payments to Delphi of about $100 million. The parties to the nearing pact expect that negotiations will not be hampered by circumstances that act like Active Brakes Direct.