Thursday, May 25, 2006

GM seeks more time for Delphi labor deal

Wednesday, May 24, 2006
GM seeks more time for Delphi labor deal

Brett Clanton / The Detroit News

General Motors Corp. asked the bankruptcy judge overseeing Delphi Corp.'s reorganization to postpone hearings on the supplier's controversial motion to reject its labor contracts, and allow more time to reach an out-of-court deal and avoid a strike.

In a letter sent Tuesday to U.S. Bankruptcy Court Judge Robert Drain, GM requested that the hearings, set to resume today in New York, be adjourned for up to 60 days while discussions between the automaker, Delphi and UAW leaders continue.

GM's letter contends the hearings, begun earlier this month, have been a distraction from complex negotiations among the automaker, Delphi and the United Auto Workers designed to craft a bailout for Delphi and provide a soft landing for thousands of the supplier's factory workers.

"We would like to allow all of the parties to focus all of their time and energy on reaching a consensual agreement," said GM spokesman Jerry Dubrowski, who confirmed the letter had been sent but would not provide a copy or discuss details.

If granted, GM's request could lower the temperature of the negotiations, which were inflamed in late March when the supplier filed a court motion to reject union contracts protecting the wages and benefits of 33,000 U.S. factory workers.

Delphi said Tuesday it is opposed to postponing the hearings.

GM's letter also marks the first time the automaker has put a timetable on reaching an agreement with Delphi. It suggests the automaker, after entering the talks in November, may be closing in on a deal.

An agreement would remove one of the biggest sources of anxiety over GM's outlook and its own efforts to avoid bankruptcy. But any pact is sure to be costly for the struggling automaker.

GM, which spun off Delphi in 1999, estimates its liability to former workers at Delphi will be at least $3.6 billion and could hit $12 billion.

Strike would be costly

A strike by UAW workers at Delphi, GM's largest customer, could be far more expensive and could even topple the auto giant into bankruptcy.

That is why GM is pushing Drain to go slow in considering Delphi's motion to reject its labor agreements.

Delphi, which filed for bankruptcy in October, claims that high labor costs inherited from its spinoff from GM are hurting the company's ability to compete. After failing to win concessions from the six unions representing its U.S. workers, the supplier on March 31 filed a motion to dismantle union contracts and eliminate post-retirement health benefits.

The move riled the unions, which viewed it as a step backward after reaching a historic agreement earlier to provide buyout offers to more than 40,000 workers at GM and Delphi.

But the GM letter will likely spur the judge to postpone the hearing and send the camps back to the bargaining table, said Van Conway, a bankruptcy attorney with Birmingham-based firm Conway MacKenzie & Dunleavy.

"Judges always lean toward letting parties continue settlement discussions," he said.

Still, the judge will want to hear the three sides are making progress, not simply drawing out the process, he said.

Delphi spokesman Lindsey Williams said Tuesday that Delphi opposes the adjournment request and wants to continue the hearings to seek a negotiated settlement. He said Delphi has already delayed the motion to void the contract twice, with no results, and there has been no counteroffer from the UAW during that time.

"To date, no consensual agreement has been reached. Additionally, (neither) the UAW, IUE nor USW have provided counterproposals on a comprehensive agreement," Lindsey said.

In addition to covering pension and health benefits for former workers, Delphi wants the automaker to subsidize wages until the parts maker can adjust them lower to industry average of $12 to $14 an hour.

Under a March 24 proposal, Delphi told its unions that it wanted to cut its $27 per hour wages to $16.50 and then phase in lower wages after 2007 in exchange for a $50,000 lump-sum "buydown." But the proposal assumed financial support from GM that, so far, has not been pledged.

Without support from GM, Delphi said it will cut wages to $12.50 per hour and also reduce other benefits.

Judge backs talks

Drain has favored continued negotiations between GM, Delphi and the UAW over a ruling on the contracts. When the hearing adjourned on May 12, he urged Delphi and its unions to use the time before the next court date for serious discussions.

The hearings are set to resume at 10 a.m. today in New York and pick up again on Friday.

John D. Sheehan, Delphi's chief restructuring officer, is scheduled to testify today and would be the company's highest ranking executive to participate in the hearings.

But if Drain accepts the GM motion, the hearing could be quickly adjourned.

George Anthony, chairman of UAW Local 292 that represents Delphi workers at a Kokomo, Ind., factory, said he hopes Drain gives the sides more time to talk.

"I'd rather see it done at the bargaining table than seeing a judge make a decision," he said.

But whether it comes from the bench or at the table, an agreement is likely to mean concessions of some kind.

Don Thomas, a machine operator at Delphi's Rochester, N.Y., plant with nearly 30 years of service, said he can't stand to watch it all play out. Wage cuts. Plant closures. More uncertainty. He's had enough.

That's why he is going to accept a buyout offer that ushers him into a retirement away from all of it.

"We're basically being forced out," he said. "There's really no point in staying."

You can reach Brett Clanton at (313) 222-2612 or


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