Detroit: General Motors Corp. sidestepped a potentially crippling strike at its former auto parts subsidiary when it reached an agreement on 22 June with its main union, which will allow Delphi Corp. to emerge from bankruptcy protection.
Details of the new labor contract have been withheld pending ratification by the United Auto Workers. It must also be approved by the US bankruptcy court, Delphi said in a statement.
“If ratified, we believe this agreement will be a significant milestone in our transformation and a major step towards emergence,” said John Sheehan, Delphi’s chief restructuring officer.
“The Memorandum is a testament to the dedication and hard work of the UAW, Delphi and General Motors teams.”
The new contract will reduce Delphi’s top wage for Delphi employees to between $14 and 18.50 an hour from the current rate of $27 (1,099) an hour, industry insiders told AFP.
Health care benefits will be scaled back and newer employees will have their pension benefits reduced to a defined contribution plan from a defined benefit plan.
The pensions of 4,000 Delphi workers who used to be GM employees will be protected and GM will subsidize their wages, the industry insiders said. GM set aside seven billion dollars last month to complete the restructuring of Delphi and cover the liabilities it would assume under the deal.
GM spun Delphi off in 1999 and still depends on it for nearly $14 billion worth of parts annually. The settlement will allow the automaker to purchase more components at less cost on the global market, including from suppliers in China and India, said GM’s chief financial officer, Fritz Henderson.
The agreement caps off more than 20 months of often difficult and contentious negotiations. The UAW objected strenuously to Delphi’s October 2005 bankruptcy filing, accusing Delphi’s management of being greedy incompetents who deliberately steered the company into bankruptcy court in order to break down hard won union gains.
Delphi chairman Robert Miller added to the tensions by repeatedly threatening to ask the bankruptcy judge to set aside the union’s existing labor pacts. UAW president Ron Gettelfinger countered with the threat of a strike at Delphi that could have shuttered GM’s production.
Delphi continued to restructure during the negotiations and cut its unionized workforce in the United States to about 18,000 from the 34,000 it employed when it filed for bankruptcy in 2005.
In a reflection of the acrimony that had characterized the discussions, the UAW did not refer to Delphi by name but only as GM’s “former parts operations” in a statement confirming the agreement.
UAW spokesman Roger Kerson told AFP that the union hoped to have the ratification votes wrapped up before the end of next week. GM welcomed the deal.
“GM is encouraged by the continued progress, and remains committed to working with the UAW, Delphi and other parties to reach a final resolution that will allow Delphi to emerge as a more competitive strategic supplier,” GM spokeswoman Renee Rashid-Merem said in a statement.