The day of reckoning has come. With its two key unions,
the UAW and IUE, rejecting demands for massive pay cuts, bankrupt auto supplier
Delphi has gone back to court. It is seeking to have its labor contracts voided,
while also cutting thousands of jobs. Union officials, meanwhile, are passing
out picket signs and getting ready to declare a war that could result in serious
collateral damage. The biggest impact would likely be felt by General Motors,
whose North American plants, some analysts predict, would be shut down by parts
shortages within days. But other manufacturers, including the Japanese giant,
Toyota, may also be seriously impacted.
Stay with TheCarConnection.com as we post regular updates on the drama at
Delphi.
Delphi
goes to court to break union contracts.
CEO Robert 'Steve'
Miller made good on his threat to ask the bankruptcy court in
New York to cancel the company’s labor
contracts with the United Auto Workers and five other unions. As promised the
UAW responded by halting discussions with the bankrupt supplier and reiterating
that it will strike if the judge allows Delphi to change the compensation
of its production workers. The preliminary reorganization plan also calls for
closing 21 of
Delphi's 29 plants in the
U.S. and effectively eliminating
thousands of jobs among its 34,000 hourly employees.
Delphi had warned in February it would ask the
banrkuptcy court to void its existing contract if it could not reach an
agreement on revised contracts by the end of March. Talks aimed at revising the
existing contract reached an impasse this week, union officials said.
Ron Gettelfinger, the UAW president,
said Delphi's decision ended any hopes of a settlement that had blossomed last
week when the company and the union agreed on buyout plan that would allow
13,000 workers to retire and another 5,000 to transfer back to GM.
“Unfortunately, Delphi’s filing of its 1113/1114 motions kills that momentum.
Indeed, today it appears there is no basis for continuing discussions,"
Gettelfinger said.
“In the event the court rejects
the UAW-Delphi contract and Delphi imposes the terms of its last
proposal, it appears that it will be impossible to avoid a long strike," he
added. “The UAW has worked diligently in good faith to resolve the
Delphi situation through collective
bargaining instead of through a lawyer-driven court process or confrontation.
Regrettably, Delphi has chosen another path,”
Gettelfinger's statement said. Earlier this week, the investment firm of
Merrill, Lynch said that the filing of the 1113 and 1114 petitions with the
bankruptcy judge could lead to a strike against Delphi's operations by the UAW and other
unions. Strikes aimed at Delphi will
undermine, GM's shaky finances, Merrill Lynch warned. GM lost $10.6 billion in
2005 and also warned in its 10K filed this week that a strike would have a
serious impact on its finances. - Joe Szczesny
GM CEO laments
Delphi decision; other makers could be
hurt, as well
"We disagree with Delphi's approach
but we anticipated that this step might be taken," said General Motors CEO Rick
Wagoner, responding to news that Delphi’s own CEO, Steve Miller, would ask the
bankruptcy court to void the suppliers labor agreement with the UAW and five
other unions. Until a few days ago, it had begun to look like a confrontation
might be avoided, in large part due to the help of the giant automaker, which
counts Delphi
, its former parts subsidiary, as
one of its largest suppliers. GM agreed to a multi-billion-dollar buyout of
Delphi
workers, while also allowing
thousands more to transfer back to General Motors plants. But
Delphi
’s continued insistence on huge pay
cuts soured the deal. The question is when and how badly a union walkout at
Delphi
would impact GM. Unlike decades
past, few assembly lines store large supplies of parts and components any more,
so some analysts suggest the automaker might be forced to start closing its own
assembly lines within a matter of days. Combined with the many other problems
facing GM, observers fear the impact could be devastating. Among other things,
it could result in further erosion of GM sales and market share. But the
U.S.
giant is not alone.
Though GM still makes up the
majority of Delphi’s sales, the supplier has been
steadily increasing both its non-automotive business, and its list of non-GM
customers. Toyota now ranks as one of
Delphi’s major sources of revenue, and the
supplier is currently one of the three largest sources of parts and components
for Toyota’s North American assembly lines,
according to company officials. Toyota on Friday issued a statement
saying it would continue "working with Delphi through this difficult period."
The Japanese automaker, the statement continued, did "not not foresee any
production interruption at our North American plants. However, a spokesman
acknowledged that this was a tentative and potentially temporary bit of
optimism. Should Delphi's unions decide to strike, he admitted, the
situation could quickly change. - TCC Team
Delphi plans to shrink
dramatically
Delphi will emerge from bankruptcy as a
smaller and more profitable company, company officials said Friday. "We are
clearly focused on
Delphi's future," said Robert 'Steve'
Miller as he sketched out a plan for the now-bankrupt company. "Emergence
from the Chapter 11 process in the
U.S. requires that we make difficult,
yet necessary, decisions. To complete our restructuring process, we must focus
on five key areas," added Miller, who said the nullification of the existing
labor agreements wit the UAW and GM are only the first two steps in Delphi's
transformation.
Miller said
Delphi’s plans call for shrinking its
product portfolio dramatically to capitalize on patented technology and market
strengths. It will also cut its existing salaried work force, which has been
downsized several times, by 25 percent. Miller also said
Delphi needs to come up with a workable solution
to its current pension situation, which could include stretching out pension
payments or developing an alternate solution. "We are mindful of the impact the
implementation of this plan will have on some of our stakeholders, including our
employees and communities, yet ultimately, these actions will result in a
stronger company with future global growth opportunities," he added. - Joe
Szczesny
Sweeping Buyout Planned at GM by Joseph
Szczesny (3/24/2006)
UAW agrees to cuts at company, Delphi.
GM, UAW Reach Delphi Deal by TCC Team
(3/22/2006)
Sweeping buyouts to help GM right Delphi, job cuts.
Delphi drama
could kick off political firestorm
The latest twist in the
Delphi bankruptcy could kick off a
firestorm in
Washington. A letter, dated Thursday, from 14
Democratic Congressman from across the U.S. has been posted on the United
Autoworkers Union website, urging Delphi CEO Robert ‘Steve’ Miller to “bargain
in good faith,” and not “use the bankruptcy process as a substitute for
collective bargaining." The letter went on to say that the 14 Congressmen
"strongly urge
Delphi to come to a fair agreement with
its employees and their representatives." Among those signing were Michigan
Cong. John Dingell, Major Owens of
New York, Sherrod Brown and Ted Strickland
of
Ohio, and Rush Holt of
New Jersey. Those heavily-industrialized
states would feel significant effects from a strike at
Delphi, which would, in turn, have an
immediate impact on automakers like General Motors and
Toyota, as well as other automotive suppliers. – TCC Team
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