Delphi buyouts grow

Saturday, June 10, 2006
Delphi buyouts grow

Deal that covers all UAW workers could avert a strike

Brett Clanton / The Detroit News


Delphi Corp. struck a deal with the United Auto Workers to offer cash buyouts and early retirements to lower-seniority workers, an important step toward reaching a broader labor pact that could head off a strike.

The agreement, announced Friday as UAW leaders prepare to convene Monday in Las Vegas, comes in addition to early retirement packages offered in March to 13,000 more experienced Delphi workers. All 24,000 UAW workers at the largest U.S. parts supplier are now eligible for a package to leave the company.

Under the pact -- first reported in The Detroit News on Tuesday -- Delphi is offering workers with fewer than 26 years on the job lump-sum buyouts ranging from $40,000 to $140,000. Accepting the check means walking away with no benefits except accrued pension credits.

The Troy-based parts maker is also lowering the eligibility requirement for the previously announced early-retirement program by one year to include workers with 26 years of service.

The expanded buyouts come amid a massive exodus of U.S. autoworkers taking packages to leave Delphi, General Motors Corp. and Ford Motor Co.

But the deal also provides new hope that bankrupt Delphi and the UAW can work through labor issues that once seemed intractable.

Delphi and the UAW said Friday that bankruptcy-court hearings on the supplier's request to void labor contracts have been pushed back to Aug. 11. The hearing had been scheduled to resume Friday.

This gives the two sides more time to work out a broader agreement on proposed wage and benefit reductions and appears to lessen the risk of a strike that could cripple Delphi and GM, Delphi's biggest customer and former parent.

Delphi's most recent proposal to the UAW calls for workers to take a pay cut from about $27 an hour to $22 an hour initially and then to $16.50 an hour. That offer assumes a $50,000 bonus subsidized by GM in exchange for price breaks from Delphi. If GM does not offer financial assistance, Delphi has said it wants to cut wages to $12.50 an hour.

Delphi also has said it wants to close or sell 21 of 29 U.S. plants, including several in Michigan.

If U.S. Bankruptcy Judge Robert Drain grants Delphi's request to ax the contracts and Delphi slashes wages, the supplier's six unions are virtually guaranteed to walk off the job.

The news Friday gives UAW President Ron Gettelfinger some breathing room heading into the union's constitutional convention Monday. Gettelfinger is almost sure to be re-elected to a second four-year term next week but is under pressure to protect workers from job and pay cuts.

"Delphi's decision to adjourn the hearings is a step in the right direction and the UAW supported the request for an adjournment," Gettelfinger and UAW Vice President Richard Shoemaker said in a joint statement Friday.

In late May, GM asked for a 60-day postponement so the sides could focus on the talks. It was turned down, but GM in the end got what it wanted, perhaps after exerting its leverage in the talks.

Delphi, which filed for bankruptcy protection in October, said it welcomed the extra time to negotiate.

"The court has advised the parties to continue efforts for a consensual resolution of the issues and work diligently toward an agreement outside of court," said Delphi Chief Restructuring Officer John Sheehan. "We remain committed to that outcome."

GM played a key role in the expanded attrition deal announced Friday. The automaker agreed to pick up half of the tab for the new Delphi buyouts and expanded early retirement offers.

With the buyouts added, Delphi's retirement incentives are nearly identical to those being offered at GM, which this spring extended exit offers to its 113,000 U.S. workers as part of a goal to eliminate 30,000 factory jobs by 2008.

One difference: A few hundred Delphi workers hired recently at a lower wage rate will be offered $40,000 to give up their jobs.

Under the historic agreement, GM said it would offer up to $35,000 and full benefits to workers with at least 27 years on the job and cash buyouts, ranging from $70,000 to $140,000, to lower-seniority workers. In the same pact, Delphi was allowed to offer early retirement packages to 13,000 UAW workers and send 5,000 workers back to GM.

As of early June, more than 20,000 GM workers and nearly 10,000 Delphi workers had signed up for the offers.

The expansion of Delphi's program to include buyouts likely will find even more takers, but will present hard choices for workers such as Ed Overstreet.

The 45-year-old skilled tradesman has 25 years on the job, but worries that a $140,000 buyout would not carry him to retirement. He said he would rather live with the uncertainty of Delphi's reorganization than hunt for a job in a bad economy.

"If I had 10 years in, and I was 35 years old, I'd think about it," said Overstreet, who works at a Delphi factory in Kokomo, Ind.

Overstreet and many others have filled out paperwork to "flow back" to GM, which is also in financial trouble after a $10.6 billion loss in 2005 but has so far managed to avoid bankruptcy.

The UAW said as of Friday, Delphi workers have been offered 1,105 flow-back jobs at GM.

Separately, Delphi said it is still negotiating terms of an early retirement program with the International Union of Electrical Workers-Communications Workers of America, United Steelworkers and its other unions.

Those unions represent 9,000 of the supplier's 33,000 U.S. hourly workers.

You can reach Brett Clanton at (313) 222-2612 or bclanton@detnews.com.