Saturday, June 10, 2006

Delphi weighs more buyouts

Tuesday, June 06, 2006
Delphi weighs more buyouts

Supplier, UAW discuss offers that could help two sides reach labor pact.

Brett Clanton / The Detroit News

Bankrupt auto supplier Delphi Corp. is likely to expand a massive early retirement program to include cash buyout offers for lower-seniority workers, a move that would provide a safety net for thousands more factory workers as the company downsizes in Chapter 11.

Over the weekend, the company and the United Auto Workers moved closer to a deal that would mirror an "accelerated attrition" program now under way at General Motors Corp., according to people familiar with the negotiations.

Delphi already is offering early retirement packages to UAW workers with 27 years or more seniority. Now it's preparing to offer lump-sum buyouts of up to $140,000 to workers with less time on the job. Workers who accept lump-sum buyouts would give up all benefits except accrued pensions.

An announcement of the expanded Delphi program could come in the next few days, the people said.

Citing the "intensive and constructive" talks with its unions over the weekend, Delphi asked Judge Robert Drain to postpone a hearing Monday in U.S. Bankruptcy Court on whether the supplier can void its union contracts. Drain granted the motion to allow the two sides to continue negotiations. The hearing will resume Friday.

"It would be safe to say there has been an exchange of ideas," said Jack Butler, Delphi's lead bankruptcy attorney.

Delphi's move to postpone the hearing suggests the supplier and its six unions are making some progress toward an agreement on labor costs that could avert a debilitating strike.

Negotiations are heating up days before the UAW begins its national convention in Las Vegas. A deal on expanded Delphi buyouts would give UAW President Ron Gettelfinger a victory heading into his re-election vote.

But tough issues would remain, particularly on wages and benefits for Delphi's remaining workers. Any final agreement also will require the participation of GM, Delphi's one-time parent, which still has obligations to its former workers.

In a March 24 proposal to the UAW, Delphi signaled that it would offer buyouts for employees as part of a broad labor agreement, but said the offer was contingent upon GM's financial involvement.

Delphi filed for bankruptcy Oct. 8 after failing to win concessions from its unions and a financial bailout from GM, which spun off the supplier in 1999 and is still the parts maker's largest customer.

In Chapter 11, Delphi has proposed slashing its $27-per-hour factory wages by more than half and closing or selling 21 of 29 U.S. plants as part of a plan to emerge from bankruptcy by next year.

When unions representing its 33,000 U.S. workers resisted those efforts, Delphi on May 9 began a court process to dismantle its labor contracts.

A ruling in its favor would allow the company to make wage cuts unilaterally, but could also push its unions closer to a strike.

UAW members have overwhelmingly authorized their leaders to call a strike if Delphi wins such a right.

A hearing on the motion, however, has proceeded slowly. Delphi, after presenting 13 witnesses, finished making its case Friday. The unions were set to begin their 21-witness case Monday. But after granting Delphi's request to allow more time for talks, Drain said the hearing would resume Friday.

Under a landmark pact in March, the UAW allowed Delphi and GM to offer early retirement packages to thousands of workers as part of downsizing efforts at both companies.

GM extended buyouts and early retirements to all of its 113,000 U.S. workers, with the hope of speeding up a plan to cut 30,000 jobs by 2008. Delphi made early retirement offers to 13,000 workers with at least 27 years of service, but no buyouts to younger workers, and was allowed to send 5,000 former GM workers back to the automaker.

The GM buyouts offer $140,000 to workers with fewer than 27 years but more than 10 years on the job to leave without benefits. Workers with fewer than 10 years can get $70,000 to walk and sever all ties.

The attrition program has received a better response than either company had expected. More than 20,000 GM workers and nearly 10,000 Delphi workers have signed up with weeks to go before a June 23 deadline.

If Delphi expands its program to include buyouts, it is likely to pare its payrolls of many more workers without need of layoffs. The company has plans to eliminate more than two-thirds of its 33,000 work force in bankruptcy, and buyouts could soften the blow.

Neither the UAW nor GM officials would comment on what was being discussed in the Delphi talks over the weekend.

Delphi spokesman Lindsey Williams said the sides had made progress, but refused to elaborate.

Brad Rubin, an analyst with BNP Paribas in New York, said Delphi's request Monday to keep talking out of court is a good indication that the company is close to an agreement. "I think it's certainly a positive sign," he said.

In addition expanding the attrition program for UAW workers, Delphi is working to close similar agreements with its other five unions.

Delphi has asked the court for approval to provide 4,000 early retirement packages to members of the International Union of Electrical Workers-Communication Workers of America, Steelworkers and its other smaller unions, but has yet to come to come to terms with the unions on the program. It is unclear whether buyouts would also be extended to non-UAW members at Delphi.

Also Monday, GM accused Delphi of engaging in "blackmail" by threatening to tear up more than 5,000 GM parts contracts and asked a judge to intervene. In papers filed with the bankruptcy court, GM said Delphi knows that scrapping the contracts could "result in the shutdown of GM plants" that use Delphi's parts. That would do "irreparable harm" to GM, but its effect on Delphi would be far more severe, the automaker said.

Drain is scheduled to take up Delphi's motion to reject the GM contracts on June 19.

Detroit News wire services contributed to this report. You can reach Brett Clanton at (313) 222-2612 or

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