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Delphi Reaches Tentative Pact With Union on Reorganization

Reuters
Friday, 22 Jun 2007 | 4:26 PM ET

Delphi said it reached a tentative deal with the United Auto Workers and former parent General Motors to complete the bankrupt auto-parts maker's reorganization.

Delphi said a memorandum of understanding signed with the union and GM covers site plans, work force transitions and other issues. It declined to release further details.

The agreement must be ratified by workers at the local units and approved by the U.S. Bankruptcy Court.

If confirmed, Delphi's agreement would also clear a major risk for former Delphi parent GM, which remains Delphi's biggest customer.

"At least it's a good thing that they have a deal signed," said Kam Hon, credit analyst at DBRS. "The major risk -- the threat of a strike -- would now appear to be remote. From that standpoint, it's favorable news for GM."

While the UAW and Delphi have managed to reach an agreement, the issue of national talks looks to be a contentious one.

Detroit's Big Three auto makers are "posturing" when they say they need a $30 reduction in hourly wages and benefits as they try to return to profitability, the United Auto Workers union president said on Friday.

Speaking to UAW members in an online chat, Ron Gettelfinger also said a strike is a possibility during upcoming contract talks with General Motors, Ford Motor and Chrysler Group, being sold off by DaimlerChrysler.

"Unfortunately, the newspapers keep repeating that the auto companies 'need' a $30 reduction in hourly wages and benefits," Ron Gettelfinger said in an online chat with UAW members. "In our opinion, this is nothing more than posturing by the auto companies."

When asked if striking was an option, Gettelfinger said: "Yes." He also said the union would "not negotiate in the press" as it heads into contract negotiations beginning July.

The automakers are expected to ask for major concessions on health-care benefits to compete with nonunion Asian automakers.

U.S. automakers pay their factory workers an average of about $73 per hour in wages and benefits, compared to just $44 per hour for the three major Japanese car makers operating plants in North America, according to industry data. Most of the difference stems from health-care expenses.

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