Delphi asks judge for right to cancel contracts

Delphi asks judge for right to cancel contracts

By Adam Geller , Associated Press

NEW YORK — Auto parts supplier Delphi Corp. argued Tuesday that it must be given the right to cancel its labor contracts, telling a bankruptcy judge that is critical to the cost cutting required for its survival.


Delphi's argument

"Without transforming Delphi's North American operation to be competitive in North America, let alone globally, these debtors cannot reorganize and the corporation will fail," Delphi attorney Jack Butler told Judge Robert Drain and a packed courtroom. "Simply stated, Delphi must become competitive to survive," Butler said.

UAW's argument

Lawyers for the United Auto Workers union contended that letting the company cancel its contracts would give Delphi an overwhelming and unfair advantage, allowing it to force through deep wage cuts and rob its workers of long-promised benefits.

What Delphi wants

Delphi has proposed cutting its workers wages from $27 an hour to $16.50 an hour. That proposal, however, would require a large contribution from General Motors, Delphi's former parent and largest customer. Without such a contribution, Delphi is prepared to pay its workers $12.50 an hour.

What might happen

The union has pledged to strike if Delphi cancels the contracts. Such a strike could have a devastating effect on Delphi, its 33,000 hourly workers and on GM, which relies heavily on Delphi parts for its own production.

What's next

The trial in U.S. Bankruptcy Court for the Southern District of New York is expected to last for several days and Drain is not expected to rule for weeks.


(05.09.2006)