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Officials: Delphi Close on UAW Deal

From The Associated Press| June 20,2007

Struggling auto parts maker Delphi Corp. is so close to reaching a wage-and-benefit agreement with the United Auto Workers that union officials were told Tuesday to prepare for a ratification vote soon, three union officials said.

UAW Vice President Cal Rapson and President Ron Gettelfinger, speaking to a gathering of local union officials in Detroit, said they want to finish with Delphi before July 23, the official start of national contract talks between the UAW and Detroit's three automakers, three local union presidents who attended the meeting said Tuesday.

The presidents, who asked not to be identified because they were not authorized to speak for the union, pointed out that Delphi and General Motors Corp., its former parent, begin a two-week plant shutdown starting July 1, so any agreement likely would have to be voted on by the end of June while plants are still open.

One of the presidents said after the meeting they were told a deal could happen in the "next couple of days."

UAW spokesman Roger Kerson declined to comment Tuesday. Delphi spokesman Lindsey Williams would not comment on the negotiations other than to say discussions continue with the UAW and Delphi's other unions.

Rapson and Gettelfinger cautioned that no agreement had been finalized, the presidents said.

The remarks were made at a gathering of Delphi and GM local union officials preparing for the upcoming national contract talks.

The meeting was attended by local presidents and shop chairmen as well as top union and GM officials. GM officials said the company's turnaround plan was beginning to take hold and explained how its costs are higher than Asian competitors, one of the presidents said.

The local presidents said the wage agreement is similar to a supplemental contract agreed to in the spring of 2004 that pays newly hired workers $14 per hour, with 3 percent increases every six months until they reach as high as $18.50. Older workers at Delphi make a base wage of about $27 per hour.

The pact would apply to all Delphi workers, but older workers could get a lump-sum payment from GM and have the choice of retiring, working for less money or returning to GM if jobs are available, the local union presidents said.

Delphi, GM's former parts arm that was spun off as a separate company in 1999, has said it needs a lower wage scale and other changes to compete against companies with cheaper labor costs.

Troy-based Delphi has been operating under Chapter 11 bankruptcy protection since October 2005. It has sought bankruptcy court permission to void its labor contracts, but says it would rather reach a consensual wage and benefit agreement with its unions.

Delphi, which lost $533 million in the first quarter and $5.5 billion in 2006, needs a settlement with its unions before private equity firms will invest up to $3.4 billion needed to emerge from Chapter 11 later this year.

GM is involved in the talks because it is on the hook for an estimated $7 billion in liabilities for Delphi pension and retiree health care expenses.

In a recent regulatory filing, GM estimated that its labor expenses for Delphi include another $500 million when it emerges from bankruptcy protection and $300 million to $400 million for several more years. Those may come as wage subsidies for Delphi workers.

GM also estimates that it will have to make an undetermined number of annual transitional payments to Delphi of about $100 million.

GM expects that the Delphi labor costs will be more than offset by reductions in a $2 billion annual price penalty that GM now pays Delphi for auto parts.

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