Monday, May 08, 2006

Delphi-union court fight puts both in a position to lose big

Monday, May 08, 2006
Daniel Howes

Delphi-union court fight puts both in a position to lose big

They may not end up being the three days that changed Detroit's automotive world, but they'll be close.

Beginning Tuesday in a New York courtroom, Delphi Corp. will try to persuade Judge Robert Drain that he should void the bankrupt supplier's union contracts and retiree health-care benefits -- a nuclear option that federal bankruptcy judges typically avoid in favor of negotiated settlements.

The United Auto Workers and other unions will plead for more time, slam Delphi for bargaining in bad faith and avoid arguing whether their contracts are competitive with other unionized suppliers. They aren't, and the unions know it because they negotiated many of those contracts.

This is the week that many hoped would never come, that key bond market players figured would be postponed, that union members and their leaders dreaded because it would expose the raw -- and potentially embarrassing -- numbers behind the union rhetoric.

Options are limited

But most of all, it would begin a process both sides can stop only one of two ways -- with a deeply concessionary contract that acknowledges a new standard for major unionized suppliers or with a damaging strike. Delay doesn't appear to be an option.

"Right now," a ranking Delphi executive close to the process told me, "we don't have a compelling argument to move it. We've been adamant that we want to move forward. Someone could come up with a package that makes sense."

Not likely, not now. Union bargainers who were making progress in talks with Delphi and former parent General Motors Corp. have been swamped preparing for this week's hearings, stalling the momentum that produced landmark buyout offers in late March for Delphi and GM hourly workers.

In an ideal world, Delphi would let the UAW get through its nominating convention in Las Vegas, which ends June 15. And it would let the GM-Delphi-UAW buyout period end on June 23 before it asked the judge to nuke the contract. Not gonna happen.

Management exposed, too

Which isn't to say that Delphi's execs are itching for Judge Drain to find in their favor this summer so they can impose a cheaper, more flexible contract on their unions. They aren't, because that would all but guarantee a strike Delphi wants to avoid probably more than UAW leaders do.

As disgusting as Delphi's three contract proposals have been to the union -- so disgusting that UAW bargainers haven't made a single counter-offer -- there will be serious negotiations once this week's hearings conclude.

"We would prefer," a union official told me, "to have it resolved through negotiation rather than by a judge."

Either way, these three days are likely to fundamentally alter a head-in-the-sand posture that both sides have used for too long to deny their predicament. The facts Delphi is likely to marshal won't just undercut the union.

They'll also expose the real-life consequences of expedient management decisions and bargaining shortcuts that landed Delphi in bankruptcy and now threaten the livelihoods of thousands of Delphi employees and the communities that depend on them.

Daniel Howes' column runs Mondays, Wednesdays and Fridays. Reach him at (313) 222-2106 or


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