U.S. News

UAW Members Give Green Light to Historic Delphi Agreement


Workers at struggling auto parts giant Delphi's largest union have approved a historic contract agreement that cuts wages for many longtime workers but secures thousands of jobs at plants that once were in jeopardy.

The ratification comes after two years of sometimes contentious negotiations and averts a threatened strike that would have crippled Delphi's former parent, General Motors.

Sixty-eight percent of the workers who voted were in favor of the new four-year pact, while 32 percent were against it, the UAW's leadership said in a statement Friday.

About 17,000 workers at 18 Delphi facilities across the U.S. were eligible to vote on the deal, which also allows some plant closings and cuts wages for longtime workers from around $27 per hour to a pay range for everyone that runs from $14 to $18.50.

A total of 11,225 workers turned out for the vote, with 7,613 in favor and 3,612 voting against it, said a local union official who didn't want to be named because the breakdown of the vote had not been released by the international union.

The pact will make Delphi more competitive as it tries to emerge from Chapter 11 bankruptcy protection, but it also clears the table for the UAW to concentrate on crucial contract talks later this summer with GM, Ford Motor and Chrysler Group, said David Cole, chairman of the Center for Automotive Research in Ann Arbor.

The agreement makes Delphi a much stronger company in the businesses it considers to be its core: Electronics, safety systems, heating and air conditioning systems, Cole said.

"I think Delphi is really poised to be a powerhouse, because they have a technology base that is really strong," he said.

It also shows that the UAW is willing to bend to help companies that are struggling against lower-cost competitors, and that could be a big factor in talks with the Detroit Three as they seek labor cost parity with Toyota Motor and Honda Motor, Cole said.

Mike Hanley, president of a large UAW local in Saginaw, said the agreement proves that UAW members can change with the global economy.

"They recognized a reality that as the world changes, we have to adapt, whether we like it or not," he said, adding that the deal could have been worked without Delphi heading into Chapter 11.

He said the UAW did well considering the bankruptcy protection, including guarantees for work from GM through 2015 at several plants.

"The best work force in the world can't get paid if they don't have contracts," Hanley said.

Future Pattern

Analysts have said the deal likely will become the pattern for other unions at Delphi, which was GM's parts-making operation until it was spun off as a separate company in 1999. It also could set wages in the rest of the domestic parts industry and perhaps affect the national contract talks with the Detroit Three automakers.

It also is key to Delphi's plans to attract private equity investors who would sink up to $3.4 billion into the company, helping it to emerge from bankruptcy protection later this year.

A group of investors led by Appaloosa Management LP had signed up to invest in Delphi, contingent on a deal with its unions. Appaloosa founder and President David Tepper would not comment when asked if the deal is enough to trigger the investment.

"Happy to get a deal with labor," is all Tepper would say Friday.

The pact also clears the way for the sale of several Delphi factories and some plants jettisoned by Ford that had been held up by the lack of a wage and benefit agreement, Cole said.

And it ends uncertainty over GM's liability for Delphi's labor expenses. GM is on the hook for an estimated $7 billion in pension, health care and other liabilities for its former workers at Delphi. The nation's largest automaker likely will subsidize wages of older GM workers now employed by Delphi, and many will get the chance to return to GM plants under the deal.

Under the contract, the UAW managed to keep three more plants open than Delphi initially had proposed. It also got a series of options for longtime workers that include a $35,000 annual payment for three years to production workers whose wages will be cut. Skilled trade wages will remain unchanged under the pact.

Across Delphi, only 4,000 of the company's 17,000 UAW workers are former GM workers, their ranks thinned by early retirement and buyout packages offered last year by GM and Delphi.

Delphi has a total of 20,000 production workers nationwide, with about 3,000 represented by other unions, which now must negotiate similar deals with the companies.

The deal still must be approved by a U.S. Bankruptcy Court judge in New York.

The pact would leave Delphi operating four UAW plants: Grand Rapids; Kokomo, Ind.; Lockport, N.Y.; and Rochester, N.Y. GM or a third party would run the Flint East plant, Saginaw Chassis and the Needmore Road plant in Dayton, Ohio.

Delphi plans to sell its Saginaw Steering plant and others in Adrian; Sandusky, Ohio; and Cottondale, Ala. It would close or consolidate into other facilities plants in Coopersville; Columbus, Ohio; two in Milwaukee; Anderson, Ind.; and Wichita Falls, Texas.

A plant in Athens, Ala., would be consolidated into the Saginaw steering plant for potential sale, according to the Web site of the Athens UAW local.