Recovering auto parts maker Delphi Corp. is close to reaching a wages and benefits agreement with the United Auto Workers (UAW). Union officials said they were told today to prepare for a ratification vote soon.
UAW President Ron Gettelfinger and Vice President Cal Rapson told local Detroit union officials that they want to finalize Delphi before July 23, the official start of national contract negotiations between the UAW and Detroit’s three automakers, three local union leaders who accepted attending the meeting said last Tuesday.
The presidents, who spoke on condition of anonymity because they were not authorized to speak for the union, stressed that Delphi and General Motors Corp., its former parent company, will begin a two-week plant shutdown beginning July 1 any deal would likely need to be voted on by the end of June while the facilities are still open.
One of the presidents said after the meeting that they had been told that an agreement could be reached in the “next few days”. UAW spokesman Roger Kerson declined to comment Tuesday. Delphi spokesman Lindsey Williams also declined to comment on the negotiations other than to say talks with the UAW and other Delphi unions are continuing.
Gettelfinger and Rapson warned that no agreement had been reached, the presidents said. The statements were made at a gathering of local union officials from GM and Delphi preparing for upcoming national contract talks.
The meeting was attended by local presidents, shop stewards and senior union and GM officials. GM officials said the company’s turnaround plan is starting to take effect, saying its costs are higher than those of Asian competitors, one of the presidents said. Meanwhile, local presidents said the contract is similar to a supplementary agreement agreed in early 2004 that pays newly hired workers $14 an hour, with three percent increases every six months until they reach $18.50. Older workers at Delphi make a base wage of about $27 an hour.
The agreement would apply to all Delphi employees, but employees with seniority rights could receive a lump sum payment from the Detroit-based automaker and have the option to retire, work for less pay, or return to GM when jobs become available. the local union leaders said.
Troy-based Delphi, GM’s former auto parts arm that spun off as a separate company in 1999, has said it needs a lower wage scale and other changes to compete against companies with lower labor costs. Since October 2005, the auto parts company has operated under Chapter 11 bankruptcy protection. It has sought permission from the bankruptcy court to nullify its employment contracts but said it would prefer to reach an amicable wage and benefits agreement with its unions.
Delphi, which reported a loss of $533 million in the first quarter and $5.5 billion a year earlier, needs an agreement with its unions before private equity firms invest up to $3.4 billion , required to emerge from Chapter 11 later this year.
GM is involved in the discussions because it is at risk of an estimated $7 billion in debt for Delphi pensions and retiree healthcare costs. In a recent regulatory filing, the automaker estimates its labor costs for Delphi will include an additional $500 million if it emerges from bankruptcy protection and $300 to $400 million for several more years.
America’s largest automaker also estimates it will have to make an undetermined number of annual transition payments to Delphi of about $100 million. The parties to the approaching pact expect that negotiations will not be hampered by circumstances that appear like Active Brakes Direct.