By DEREK R. SMITH, Kokomo Tribune business writer
Friday should prove telling for bankrupt auto supplier Delphi Corp.
Today is the deadline the Troy, Mich.-based company has set for reaching a comprehensive agreement with its unions and General Motors Corp.
The United Auto Workers union won’t agree to a new Delphi offer, according to George Anthony, shop chairman of Kokomo’s UAW Local 292.
If the parties don’t reach an agreement today, Delphi CEO Steve Miller will likely file a motion in federal bankruptcy court Friday to terminate Delphi’s union contracts.
Meanwhile, the Detroit News reported today that UAW officials have been advised that Delphi intends to file motions to reject collective bargaining agreements and terminate hourly post-retirement health care plans and life insurance at 9:30 a.m. Friday.
Two automotive experts expressed different views Wednesday about how the future might unfold for Delphi.
David Cole, chairman for Center for Automotive Research in Ann Arbor, Mich., said there remains a reasonable chance for Delphi to reach a comprehensive deal with its unions and GM.
“Generally, I feel positive about what is happening in these discussions,” he said. “It’s a high-stakes game, but there’s plenty of room — particularly with GM in the picture — for a deal.”
But AutoPacific president George Peterson said he thinks there’s a 60 percent likelihood of a Delphi strike.
“They’re coming right up to the edge of the cliff, aren’t they?” he said. “I think a lot of it is going to be who’s going to blink first.”
GM spun off Delphi in 1999. The supplier filed for Chapter 11 reorganization bankruptcy Oct. 8, citing globally uncompetitive costs.
Delphi, the nation’s largest auto industry supplier, has 185,000 workers in six divisions worldwide.
Kokomo is world headquarters of Delphi Electronics & Safety and home to about 5,200 of its 29,900 workers.
New offer
Local UAW officials at Delphi plants across the country received details of a new wage and benefits offer Monday.
The proposal would drop pay for hourly workers from $27 to $22 per hour starting July 3, then to $16.50 an hour starting in September 2007, according to Anthony and other Local 292 officials.
Delphi spokesman Lindsey Williams told The Associated Press Tuesday the company won’t comment on the proposal.
Officials at Local 292 weren’t impressed.
“There is no way our leadership will bring this proposal to the membership for a vote,” says a 292 memo circulated Monday to workers.
Local 292 officials were among those who attended a UAW meeting Tuesday in Detroit.
Anthony said UAW leadership anticipates Delphi filing on Friday its motion seeking to discontinue the contracts because the UAW won’t accept its offer.
If the company files, a hearing would be set for May 8, Anthony said. Judge Robert Drain of the United States Bankruptcy Court for the Southern District of New York would decide in about two weeks after that whether to cancel the contracts and implement Delphi’s offer.
Strike coming?
Cole said the Delphi situation may look bleak, but “I think that’s always going to be the case” in labor-management negotiations.
“This sounds like every other labor negotiations that I’ve ever been around,” he said. “The union rank and file need to see the union leadership going to the wall for the workers.”
Cole rates the likelihood of a Delphi strike as low.
“That’s an absolute last recourse kind of thing,” he said. “There are a lot of very strong reasons to settle this without a strike.”
Peterson said talks should continue even if Delphi files its motion.
“The stakes are too big for UAW negotiators to walk away in a huff,” he said. “They’ll continue talking. It won’t be very pleasant, but they’ll continue.”
Peterson said a Delphi strike would be catastrophic to GM, “taking them right to the brink of bankruptcy if they’re not there already.” He said GM doesn’t seem to have secondary suppliers for many of its components, and another supplier wouldn’t be able to produce the necessary volume in any case.
“GM has spent years beating their suppliers to a pulp [by pinching pennies],” Peterson said.
Although closures at any Delphi plant would hurt GM, plants in Kokomo and Saginaw, Mich. could be “choking points” in a strike, Peterson said.
Saginaw is headquarters of the Delphi Steering division.
Peterson said everyone in the automotive industry is watching developments closely. One way or another, he said, it will affect the September 2007 negotiations between automakers and their unions.