Sunday, June 04, 2006

GM CEO sees deal at Delphi by Sept.

Saturday, June 03, 2006
GM CEO sees deal at Delphi by Sept.

Wagoner wants the bankrupt parts supplier, UAW to come to contract agreement by Labor Day.

Bill Koenig and Greg Miles / Bloomberg News

NEW YORK -- General Motors Corp. wants an agreement with Delphi Corp. and the United Auto Workers union to come together by Labor Day, CEO Rick Wagoner said Friday.

"In this case, it takes three to tango, not just two," Wagoner said. "I can tell you from GM's side, we're working hard every day. We'd like to wrap it up as quickly as we can."

GM, the former parent of Delphi, is trying to help its largest part supplier avoid a strike that could cripple its plants.

Troy-based Delphi filed for bankruptcy protection for its U.S. operations in October and has recently asked a judge to let it void labor contracts and impose wage cuts of as much as 55 percent. The UAW, which represents 25,000 factory workers at 21 Delphi facilities, has threatened a walkout if the contracts are scrapped.

"It's a diversion for the General Motors operations and they need to get it behind them," said Dennis Virag, president of Automotive Consulting Group Inc. in Ann Arbor. "That right now is a major, major problem."

A strike at Delphi would jeopardize Wagoner's plans to cut 30,000 union jobs by 2010 and reduce other GM employee expenses such as health care and pensions. He wants to reduce costs at an annual rate of $7 billion by the end of 2006. GM lost $10.6 billion last year.

Delphi spokesman Lindsey Williams didn't immediately return a telephone message seeking comment. UAW spokesman Paul Krell wouldn't immediately comment.

Bankruptcy Judge Robert Drain on May 24 denied a request by GM for a two-month delay in hearings on whether Delphi can cancel the labor contracts.

"I urge the parties to continue to move forward," Drain said at that time.

Wagoner, who was in New York for the opening of new auto dealerships in the city's Harlem area, said in an earlier interview that GM won't emphasize incentives to boost U.S. sales even though Ford Motor Co. has announced a strong incentive program for June.

"I don't see us going back to the heavy incentive-type advertising and merchandising we were doing more of a year or two ago," Wagoner said. "We are going to continue to push the levels of our creativity."

Ford Motor Co. began offering this week no-interest financing on most of its models, coupled with a debit card for $1,000 of gasoline purchases. GM expects a "moderate market through the remainder of this year" for U.S. sales, Wagoner said. "Realistically, the market is reacting to higher fuel prices. We hope that calms down, but our crystal ball hasn't been particularly clear on that, or accurate."

GM "will see some volume declines," Wagoner said.

In June 2005, GM reacted to declining U.S. sales by offering employee prices for all customers, which led to sales increases in the next few months. Ford and DaimlerChrysler AG's Chrysler unit followed suit in July 2005.


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