Senior United Auto Workers members at auto parts supplier Delphi Corp. would receive as much as $105,000 in exchange for wage cuts or as much as $140,000 to leave the company as part of a tentative deal being presented to union members this week.
Under Delphi’s plan to emerge from bankruptcy by the end of the year, it would keep four U.S. plants, sell four others, close 10 and hand three back to General Motors Corp. under the agreement reached Friday.
UAW leaders are explaining the agreement to their 17,000 Delphi members in a series of meetings this week at union locals. Workers are to vote by Friday, when the domestic auto industry shuts down for its annual two-week vacation.
If ratified, it would end two years of acrimonious negotiations among the union, Delphi and GM as the UAW prepares for contract talks with the three Detroit-based auto manufacturers. The UAW’s four-year pacts with GM, Ford Motor Co. and Chrysler Group end Sept. 14, with negotiations set to begin July 23.
About 4,000 UAW workers who now are paid nearly $28 an hour would receive $105,000 over three years if they take a pay cut to $18.50. Those workers also are eligible for buyouts of $70,000 to $140,000 depending on length of service and could opt to return to jobs at GM. Workers hired the last three years who started at $14 an hour could receive as much as $40,000 to leave Delphi.
GM spun off Delphi in 1999, and the workers now being asked to accept pay cuts were once GM employees. Delphi also is GM’s largest parts supplier and a threatened strike there could halt production at the automaker within days.
Neither the union nor Delphi is discussing the agreement, but a copy was posted on the Web site for the Soldiers of Solidarity, a dissident UAW group that opposes wage cuts.
In a radio interview in Detroit on Monday, UAW President Ron Gettelfinger chastised Delphi for closing U.S. plants and cutting wages, but he praised GM and Chief Financial Officer Fritz Henderson for helping forge the deal. GM has said in regulatory filings it could be liable for as much as $7 billion to help Delphi emerge from bankruptcy and an additional $1 billion in labor costs.
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“If it weren’t for Fritz Henderson and his team, this agreement never would have come about,” Gettelfinger said.
That would seem to give GM favored status over Ford and Chrysler on the eve of contract talks with the UAW, but Morningstar Inc. analyst John Novak doesn’t see GM having an advantage.
The automakers are expected to press the UAW for health-care and pension concessions, more flexible work rules and elimination of the “jobs bank,” which pays laid-off workers most wages and benefits.
“GM was probably just trying to resolve this one issue on friendly terms so they could clear the stage and move on to the next battle,” Novak said. “In the grand scheme of things, for them to take back three plants is a way to build some goodwill, but it’s not going to make the road ahead any easier. Each side needs to protect its own interests, and that’s when it gets uglier.”
GM’s stock rose 81 cents, to $36.27, on the New York Stock Exchange. Delphi, which trades over the counter, lost 13 cents, to $2.54.
The three plants that GM will take back are in Saginaw and Flint, Mich., and Dayton, Ohio. The agreement calls for GM to sell them or bring in a third party to operate them.
The only UAW-represented plants Delphi would continue to operate in the U.S. are in Kokomo, Ind.; Grand Rapids, Mich.; and Lockport and Rochester, N.Y.
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