David Barkholz
July 3, 2006 - 6:00 am
DETROIT - The threat of a strike at Delphi Corp. evaporated last week with the success of early retirement and employee-buyout programs at the supplier and General Motors.
The 12,600 announced retirements and buyouts at Delphi have put the company well along the road to cutting the 24,000 U.S. hourly jobs it says it needs to reorganize under Chapter 11 bankruptcy protection.
And the outflow of Delphi's highest-paid hourly workers will bring down wages and benefits closer to those being demanded by the company.
Even UAW dissident Gregg Shotwell concedes that a strike threat has passed.
"The UAW has given (Steve) Miller everything he needs," said Shotwell, a machine operator at Delphi's Coopersville, Mich., fuel-injector plant. He has organized Delphi workers against concessions under the umbrella of Soldiers of Solidarity.
Delphi and its six unions have been at loggerheads since Oct. 8, when CEO Miller put Delphi's U.S. operations in Chapter 11 protection. He said the company needed wage and benefit cuts of more than 60 percent to compete in North America.
The crisis peaked March 31. Delphi asked the U.S. Bankruptcy Court to terminate its labor agreements with its 32,000 unionized employees.
Strike threat
Delphi's two largest unions, the UAW and IUE-CWA, said they would strike if that came to pass. The UAW represents about 22,000 Delphi workers. The electrical union represents about 8,000.
A strike at Delphi could shut GM assembly plants within days because the automaker buys about $14 billion worth of parts from its offspring. GM created Delphi in 1999 by spinning off its parts operations as an independent, publicly traded company.
The 12,600 retirements and early retirements by UAW-represented Delphi workers are just the first round of departures. GM made room for 5,000 additional Delphi workers to flow back to the automaker by getting nearly 35,000 UAW members to retire or take a buyout. That was two years sooner and 5,000 workers more than GM had expected.
The automaker expects to take a $3.8 billion charge to pay for the retirement incentives at GM and Delphi.
With buyouts and early retirements now being offered to Delphi's five other unions as well, Delphi can expect to get within 1,300 employees of the 24,000 job cuts it desires.
Eventually, the supplier wants to run just eight of its 29 plants. It plans to close or sell the other 21. The UAW says Delphi's move would cut about 75 percent of its hourly U.S. work force.
Lowering the heat
The retirements and buyouts also are causing average wages and benefits to fall at Delphi, further easing pressure for a strike.
IUE members at Delphi earn an average of $23 an hour in base wages vs. $27 an hour for UAW employees and $19 an hour for the others, said Delphi spokesman Lindsey Williams. Delphi also has hired 2,000 temporary workers to replace the retiring employees. The temps earn an entry-level wage of $14 an hour with no benefits.
If made permanent, they would still get $14 an hour, but with benefits that could about double Delphi's cost per new employee, said Gerald Meyers, a University of Michigan business professor who was CEO of American Motors from 1977 to 1982.
Meyers said a strike threat remains if Delphi pushes too hard for wage reductions before a court hearing Aug. 11 to discuss its request to cancel labor agreements.
Williams said much work remains on wages, benefits, work rules and the company's ability to close plants.
Auto analyst Craig Fitzgerald says the chance of a strike now is almost nil.
Says Fitzgerald, a partner at the Plante & Moran PLLC consulting firm in suburban Detroit: "A strike could only happen at this point if GM, Delphi or the UAW makes a colossal miscalculation in negotiations."
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