Tuesday, June 13, 2006

Parts Supplier Reaches Buyout Deal With U.A.W.

June 10, 2006
Parts Supplier Reaches Buyout Deal With U.A.W.

DETROIT, June 9 — The Delphi Corporation, the auto parts supplier, reached an agreement on Friday with the United Automobile Workers union and General Motors that offered buyouts to all of its 24,000 workers and reduced the possibility of a crippling strike.

The plan, which G.M. will finance, expands a plan announced in March that covered 13,000 Delphi workers, and comes on the eve of the union's leadership convention, which begins Monday in Las Vegas.

Agreement on the buyouts allows the two companies and the union to focus negotiations on other crucial issues like the level of wage and benefit cuts at Delphi, the amount G.M. is willing to pay for buyouts and to subsidize workers' wages, and the number of workers who will be left at Delphi, once the cuts are made.

The situation also needs to be settled, analysts say, for G.M. to proceed with its own restructuring.

The broadened buyout offer will "really alleviate a lot of the uncertainty and take away a lot of the militant impetus in the union for a strike," said David L. Gregory, professor of labor relations at St. John's University Law School in New York.

Delphi, which filed for bankruptcy protection in October, is the country's biggest parts supplier. It was part of G.M. until it was spun off in 1999. G.M. remains liable for pension and retirement health care benefits for Delphi workers who were at the automaker before the spinoff.

On March 22, G.M. offered buyouts ranging from $35,000 to $140,000 to all 113,000 of its hourly workers and 13,000 of the 24,000 U.A.W. members at Delphi. In addition, it agreed to take back 5,000 Delphi workers.

After announcing that deal, Delphi asked a federal bankruptcy judge for permission to set aside its labor contracts and impose sharply lower wage rates and less-generous benefits. Delphi also said it would close or sell 21 of its 29 plants in the United States, and cut 20,000 hourly jobs, many held by U.A.W. members.

In return, the U.A.W. threatened to strike Delphi if that happened, a move that could cripple G.M. Last month, workers voted to give leaders the authority to call a strike.

Since then, the issue has played out at the negotiating table and in court. Hearings on Delphi's request to set aside its contracts began last month, and the union had been set to present its case this week.

But on Friday, a federal judge postponed the hearings until Aug. 11, easing the likelihood of a strike before then, since the U.A.W. contract remains in effect. And, the additional time increases the prospects that the two companies and the union will come to terms.

In a statement, Delphi said it was "committed" to reaching a deal outside of court. The U.A.W., for its part, said the additional time would allow it, Delphi and G.M. to focus on negotiations without the "distraction" of the court hearings.

A spokeswoman for G.M., which has not said how much it expects the buyouts to cost, said the broadened plan was a "win-win all the way around."

Analysts said the development was promising.

"It's a very encouraging sign, because it greatly reduces the risk of a long strike," said one automotive analyst, John Casesa, managing partner of Casesa Strategic Advisers in New York. A lengthy walkout "is mutually assured destruction for G.M. and the U.A.W.," Mr. Casesa added.

But getting to a deal will require intense discussions that will ultimately reveal just how much G.M. is willing to pay to help overhaul its former parts supplier.

Delphi has proposed cutting Delphi workers' wages from about $28 an hour to $22 an hour, then to $16.50 an hour, assuming a subsidy of $50,000 a worker paid by G.M., which has not committed itself to the plan.

Without the subsidy, Delphi would cut wages next year to $12.50 an hour, or less than half what workers earn on their current contract, which is essentially the same as the contract at G.M.

The longer time for negotiations increases the chance that the U.A.W. will agree to some concessions, a move that experts say is generally inevitable once a company asks for its labor contracts to be set aside.

Still, "it's always superior if you can reach an agreement outside of court," Mr. Gregory of St. John's University Law School said.

Under the buyout plan, workers with at least 30 years experience, making them eligible to retire, would receive $35,000 and their complete retirement benefits including a pension and health care.

Workers with 10 to 26 years would receive $140,000 to leave, while workers with one to 10 years experience would receive $70,000. Both groups would receive a pension once they reached retirement age, but no health care benefits.

A small group of workers who joined Delphi in the last year, and received different benefits, would receive $40,000 to give up their jobs.

Another program would pay workers with 26 to 29 years of service a monthly stipend of $2,750 until they are eligible for retirement, if they will leave now. The plan originally applied to workers with 27 to 29 years experience, but was lowered by a year under the new program.

Claudia Piccinin, a Delphi spokeswoman, said the plan "allows us to more rapidly transform our U.S. manufacturing operations and also softens the economic impact on our hourly work force."

The deadline for accepting the buyouts at G.M. and Delphi is June 23; workers have a week after that to change their minds. Discussions continue with Delphi's five other unions on a similar buyout program.

G.M. lost $10.6 billion in 2005, and continues to lose money on its automotive operations despite posting a profit in the first quarter. G.M. wants to eliminate 30,000 jobs and close all or parts of a dozen plants through 2008, and it hopes to get that many workers to agree to its buyout plans.

Earlier this year, Delphi asked a federal judge to cancel hundreds of its parts contracts with G.M., an action that would allow it to raise the prices G.M. pays it for parts. The move ignited an angry reaction from G.M., which agreed last fall to give up discounts it had negotiated with Delphi so the company would have more cash at the beginning of its bankruptcy.

On Friday, the judge postponed a hearing on that request by Delphi until Aug. 11, allowing the two sides time to reach a deal in that dispute.

Expanding the buyouts at Delphi came as the U.A.W.'s lead negotiator, Richard Shoemaker, is set to retire next week. He also oversees talks with G.M., and is considered to be the union official closest to the U.A.W. president, Ron Gettelfinger.

Mr. Gettelfinger will choose a successor for Mr. Shoemaker at the U.A.W. convention next week. Whoever succeeds Mr. Shoemaker will immediately join Mr. Gettelfinger in the three-way discussions, which have been among the most difficult that the union has faced since the 1979 talks that resulted in concessions to Chrysler.

Copyright 2006 The New York Times Company


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