Ban sought on strike at Delphi
Customer warns that U.S. economy at risk May 11, 2006 BY JUSTIN HYDE FREE PRESS WASHINGTON STAFF NEW YORK -- A Delphi Corp. customer asked a bankruptcy court Wednesday to bar Delphi's unions from striking should Delphi cancel its labor contracts, saying a shutdown at the largest U.S. auto-parts maker would have an "enormous negative impact" on the U.S. economy. The UAW has said it will strike should Delphi impose new wages and benefits, a move that would shut down much of General Motors Corp.'s North American production within days and raise the chances that GM could be forced into bankruptcy. Delphi is GM's largest supplier, and GM is Delphi's largest customer. This is the first attempt made to block a strike by unions at Delphi. International Truck and Engine Corp., the maker of large trucks, buses and diesel engines, said in a court filing that, if Delphi cancels labor contracts and its unions threaten to strike, the court should bar the unions from walking out. "The seriousness of such work stoppages/strikes cannot be overstated," ITEC, which buys $46 million a year in parts from Delphi, said in its filing. A strike would have an "enormous negative impact," not just on Delphi's customers, but "consumers and the U.S. and global economies as a whole." Delphi has not sought to block any union from striking. Delphi spokesman Lindsey Williams said Delphi has maintained it will keep its labor contracts in place as long as productive talks continue, even if U.S. Bankruptcy Judge Robert Drain rules in its favor. Attorneys for the UAW declined to comment on ITEC's filing, but unions in other bankruptcy cases have argued that federal law strictly limits a judge's ability to stop a strike. Citigroup analyst Jon Rogers said in a note Wednesday that, while he believes the chance of a strike was low, a Delphi shutdown would also halt production at Chrysler Group, Toyota Motor Corp. and Honda Motor Co. Mercedes-Benz also has weighed in, saying a strike could halt production at its Alabama plant. "Delphi management cannot afford to disrupt customer production, and the potential for disruption goes far beyond General Motors," Rogers said. GM said in a filing Wednesday with the U.S. Securities and Exchange Commission that resolving its issues at Delphi "remains a critical near-term priority." It also said its estimates for its liabilities in Delphi's bankruptcy remained from $5.5 billion to $12 billion. Two of Delphi's smaller unions posed sharp questions to a Delphi executive Wednesday morning in the second day of hearings on Delphi's request, asking whether the company truly wanted to reach a deal with the unions before asking a bankruptcy judge to cancel its contracts. Delphi wants to cut 23,000 jobs, including 10,000 in Michigan, along with closing or selling 25 plants by 2008 and cuts in retiree benefits. Many of its plants in Michigan would be shuttered. Whoever remains among Delphi's 33,000 hourly workers today would have their wages and benefits cuts sharply, with the total reduction dependent on whether GM agrees to pay Delphi in hopes of avoiding a strike. Delphi has said it wanted to provide a "soft landing" for high-wage workers through a combination of buyouts, one-time payments and early retirements, some of which would be funded by GM. Workers that remain would see their average wages cut under Delphi's current proposed changes from $28 an hour today to $22 by September and $16.50 next year, assuming aid from GM. If GM decides not to contribute, Delphi would cut wages to an average of $12.50 an hour by July. Tom Kennedy, an attorney for the IUE-Communications Workers of America, which represent 8,500 workers at Delphi, said the union had not been offered many of the proposals that Delphi has made to the UAW. Some 1,900 IUE-CWA workers already earn lower wages under contracts negotiated over the past few years, but Kennedy said some of them would have their pay cut further to $8 per hour under Delphi's current proposals. "You didn't make any effort to sculpt each proposal," Kennedy told Kevin Butler, vice president of human relations at Delphi. "The proposal as it stands now is a one-size-fits-all." Butler said Delphi believed any differences would be ironed out in talks with its unions. Kennedy also questioned why Delphi gave its proposal to the union on March 24, and then moved to throw out its union contracts one week later. "This was a proposal and a framework for discussion," Butler said. "This is a competitive proposal, and we would have been delighted if it was accepted." Some of Delphi's creditors have also objected to Delphi's attempt to cancel its union contracts, saying the company was putting its assets at risk by raising the chance of a strike now rather than waiting until its contracts expire next year. The unions and Delphi agreed to extend the hearings to May 24 and May 26. Drain isn't expected to rule on Delphi's request until late June at the earliest. Contact JUSTIN HYDE at 202-906-8204 or [EMAIL PROTECTED]
