UAW says Delphi's offer falls 'far short'

Thursday, March 29, 2007
UAW says Delphi's offer falls 'far short'
Sources say talks will continue among union, supplier, investors to reach labor deal.
Louis Aguilar and David Shepardson / The Detroit News





DETROIT -- Although the United Auto Workers rejected the latest wage-cutting proposal from Delphi Corp. and a group of investors that wants to buy a majority stake in the bankrupt supplier, sources close to the situation said Wednesday that negotiations will continue.

UAW Vice President Cal Rapson, the union's chief bargainer for Delphi and former parent General Motors Corp., confirmed that the union had rejected the deal Monday.

"It was far short of anything we can take to our membership," Rapson said Wednesday in an interview on the sidelines of the UAW's bargaining convention at Cobo Center.

A group of private equity investors led by Cerberus Capital Management LP and Appaloosa Management LP want to invest up to $3.4 billion in Delphi, which would allow the supplier to emerge from bankruptcy as a new company with a new owner. But the deal hinges on hammering out a labor deal.

Rapson declined to specify the union's objections to the rejected proposal.

"It was wages, benefits, the amount of jobs, the job security, everything," he said. "We took that agreement, we took it to our actuaries, thoroughly reviewed it, sat down with (UAW President Ron Gettelfinger) Monday and we rejected it."

Without a new labor deal to complete the investor deal, Delphi could ask the bankruptcy court to void its labor contracts.

Gettelfinger, who said Tuesday he is willing to strike if Delphi convinces the court to do that, told reporters Wednesday he "has no idea" whether Delphi will come back with an offer the union can accept. "They had a 29-page proposal -- that's stupid," he said. "They are out of their minds."

Delphi spokeswoman Claudia Piccinin said Tuesday Delphi remains "committed to reaching consensual agreements."

Two people close to the negotiations say Delphi and its equity partners made a first proposal to the UAW around March 10, and then offered a more detailed and more generous 29-page proposal on March 21.

The second proposal includes "escalation clauses" that would raise wages every six months if certain benchmarks are met, but it's not clear what wage was offered or how much the concessions would cost UAW members. The UAW has not made a formal counterproposal to either offer.

All sides have agreed to extend the talks beyond April 1, according to sources familiar with the situation. "This is really complex -- essentially a three-ring circus," one of the sources said.

That person also said Delphi's decision to seek recently granted court approval of $37 million in bonuses to help retain as many as 440 high-level employees made little sense at a time when Delphi is seeking dramatic concessions from the UAW.

Rapson also criticized the bonuses. "Same guys who put them in Chapter 11 and they say they got to be retained," he said. "And they are dividing up that kind of money while they are asking workers to take big cuts or lose jobs completely."

The sources suggested the UAW was taking a more aggressive public stance to ease the concerns of members who will have to ratify any agreement. The UAW also has an eye on its talks this summer with the automakers.

If the UAW doesn't agree to play ball, Delphi will have to liquidate, said Patrick Anderson, a Lansing economist who has studied Delphi's bankruptcy.

"Almost all those Delphi jobs are going to go down," Anderson said. "And there is no way around serious damage to General Motors."

David Healy, an analyst for Burnham Securities, described Gettelfinger's tough talk on Delphi as the "usual labor-talk rhetoric that always heats up before negotiations."

There remains much room for compromise and he expects GM will wind up supplementing Delphi wages. "Gettelfinger is a realist," Healy said.

Wednesday marked the second day of hard line comments from UAW leaders as the union wrapped up its two-day bargaining convention, where 1,500 delegates approved bargaining guidelines for upcoming labor talks, including key negotiations this summer with Detroit's Big Three automakers.

Gettelfinger also took a tough stance on whether the union will grant further health care concessions, a key goal for each of the auto companies. The four-year contract expires Sept. 14.

"We addressed health care in '05," Gettelfinger said, referring to landmark concessions the union gave to GM and Ford Motor Co. "You don't get two bites at the apple, do you?" he said.

GM spokesman Dan Flores didn't comment directly on Gettelfinger's statements, saying it's not the company's policy to negotiate through the media.

"Based on the magnitude of the cost, health care will continue to be a discussion issue for GM and the UAW," Flores said. "We are looking at a variety of alternatives to address the health care burden. We aren't going to speculate on those options."

DaimlerChrysler AG's Chrysler Corp. and Ford declined comment.

The 103-page resolution passed by the UAW Wednesday shows the union plans to take a realistic and creative approach to future bargaining that takes into account the turbulent economic environment, but will resist givebacks on bedrock issues such as health care, pensions and job protections.

The resolution acknowledges the union has had to make tough decisions in recent years, agreeing to modify wages, health care, pensions and other compensation to preserve jobs. "The coming years will be just as tough -- if not tougher," the resolution states.

You can reach Louis Aguilar at (313) 222-2760 or laguilar@detnews.com.















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