Sunday, May 14, 2006

Delphi, GM fail to reach accord on prices

Delphi, GM fail to reach accord on prices

The automaker does not want to continue to give up discounts on parts from its troubled supplier.

By John Nolan

Staff Writer

DAYTON Delphi Corp. said Monday it was unable to work out a deal with General Motors Corp. for the automaker to continue giving up price reductions it was otherwise due for Delphi parts.

GM is contractually entitled to price reductions over time on a broad array of Delphi auto parts, but had been temporarily forgoing them since November to help Delphi through the early stages of its bankruptcy reorganization.

Delphi said on Monday that its net sales figures will reflect the previously agreed-to contract price reductions retroactive to April 1.

GM, which owned Delphi before spinning it off as an independent company in 1999, remains the biggest customer for Delphi parts.

Separately, Delphi has asked a federal bankruptcy judge for permission to reject various contracts with GM that Delphi says it can no longer afford as it tries to emerge from court-supervised reorganization in 2007.

Delphi and GM are also in continuing negotiations with Delphi's hourly labor unions for new, lower-cost contracts the company says it needs to become competitive with rival U.S. parts suppliers.

GM is involved in those talks because it guaranteed the retirement benefits of former GM workers who transferred to Delphi and because GM would be hurt if Delphi's unions failed to reach new contracts and were to go on strike.

U.S. Bankruptcy Judge Robert Drain of New York is scheduled on May 9 to hear Delphi's request to reject its contracts with its hourly unions, even while talks for new pacts continue.

The judge may not rule for several weeks afterward, and the talks can continue during that time.

Contact this reporter at (937) 225-2242




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