Tuesday, May 09, 2006

Delphi Tells Judge They Need To Shed Union Contracts

May 9, 2006

Via Detroit Free Press

Delphi Corp. told a federal bankruptcy judge on Tuesday that its very survival depended on the company being able to shed its union contracts if it could not reach an agreement to cut thousands of jobs and slash wages.

The largest U.S. auto parts supplier 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.

The United Auto Workers has said it will strike should Delphi prevail, a move that would shutter much of General Motors Corp.’s North American production.

Jack Butler, Delphi’s attorney, emphasized that Delphi understood its plan would inflict “real and vivid pain across Michigan and across other states.” But he also said that if Delphi could not reach an agreement with its unions and GM, it had no other choice save liquidation. “We believe our unions believe there is a problem. Delphi must be empowered to reach a solution,” Butler said. He added: “There’s no magic balm that makes competition go away. There’s no magic balm that takes us back to high-wage paying manufacturing.”

Bruce Simon, an attorney for the UAW, said Delphi had not exhausted talks as the law requires, and that it was attempting to use its employees as pawns in its dispute with GM. Delphi has proposed cutting the average base wages of its remaining workers from $28 an hour to $22, with a further cut to $16.50 by September 2007, assuming GM gives the company some of the aid it seeks. Without help from GM, Delphi would cut wages to $12.50.

Attorneys for GM did not make an opening statement Tuesday morning.Delphi’s wage cuts would “convert remaining Delphi workers from the middle class to the financial margins, somewhere between just getting by and poverty level,” Simon said.The hearings are expected to continue at least through Thursday, and could be extended. Delphi said today it wanted to call 13 witnesses.

Contact JUSTIN HYDE at 202-906-8204 or jhyde@freepress.com.

5/09/2006 03:18:00 PM

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