Delphi hearing delay raises hopes

Saturday, August 12, 2006
Delphi hearing delay raises hopes
Request for more time could signal progress in talks to avert strike; case will resume Thursday.
Terry Kosdrosk and John D. Stoll / Dow Jones Newswires





DETROIT -- Auto parts supplier Delphi Corp.'s approval to get a hearing on labor contracts delayed until Thursday raises hopes that progress can be made in talks aimed at reaching a settlement and avoiding a possible strike.

Delphi, which filed for bankruptcy in October, said its request to delay the hearing on getting its labor contracts thrown out was intended to facilitate continuing discussions with former parent General Motors Corp., the United Auto Workers and other unions.

"There were productive and high-level meetings conducted all day, late into the day (Thursday)," Delphi spokesman Lindsey Williams said Friday. Williams said multiple parties are participating in the talks, including various committees involved in the bankruptcy proceedings, such as the creditors' committee.

In a statement released Friday, the UAW insisted that "even with the suspension of court proceedings, discussions have been weighed down by Delphi's focus on their bankruptcy strategy."

While discussions with Delphi and GM continued through July, "the talks were at best disappointing," the UAW said. "Delphi's negotiators would not enter into any discussion which might be viewed in court as a departure from their November proposal."

That proposal to union workers included demands for a dramatic cut in compensation packages, including wage, benefit and pension cuts. Instead of revisiting wages and benefits, Delphi negotiators insisted on centering discussions on Delphi's plans with manufacturing plants, product lines and the impact of an accelerated attrition plan on Delphi's labor costs.

GM, Delphi's top customer, plays a key role in the talks because the parts supplier is a former GM subsidiary and Delphi continues to provide about $15 billion annually in components to the automaker. GM has various contractual obligations to Delphi workers who used to be employed by the automaker.

The Troy-based parts supplier has repeatedly delayed hearings related to its motion to throw out labor contracts. The motion has caused a whirlwind of controversy among Delphi's labor unions and sparked serious concerns that hourly workers may eventually strike against the supplier -- leading to disruptions in GM's production activities.

Often, a move to delay such hearings by a bankrupt company indicates progress in labor talks. Judges routinely grant delays to allow the parties to sort out differences.

GM spokeswoman Toni Simonetti declined to comment directly on Delphi's plans for a delay, but said GM remains committed to finding a mutually acceptable solution "that allows Delphi to emerge from bankruptcy as a strong supplier."

GM, the unions and Delphi are working to firm up a consensual pact that addresses Delphi's high structural costs and expenses related to retirees, while also satisfying GM and the UAW. On Thursday, GM Chief Executive Rick Wagoner characterized the talks as complex and "mind bending," and said that the multiple moving parts of the negotiations are at the root of prolonged negotiations.

In addition to Delphi's demands for lower wages and relief from retiree obligations, GM also is negotiating terms of supply contracts, some of which Delphi is asking the bankruptcy court to throw out. GM, Delphi and the unions have already agreed to a variety of initiatives aimed at cutting Delphi's work force and labor costs, including an accelerated attrition program that is ongoing.





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