New Delphi Bankruptcy: Bad Faith, Bad for All Workers

by James Parks, Mar 31, 2006

Delphi Corp.’s announcement that it will ask a bankruptcy court to throw out its union contracts has killed any momentum in negotiations over a new deal and could lead to a long strike.

UAW President Ron Gettelfinger and Vice President Richard Shoemaker laid the issues on the line in a March 31 statement:

Delphi’s misuse of the bankruptcy procedure to circumvent the collective bargaining process and slash jobs and wages and drastically reduce health care, retirement and other hard-won benefits or eliminate them altogether is a travesty and a concern for every American.

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.

Delphi set a March 31 deadline to reach a new deal with the UAW and IUE-CWA, which together represent most of Delphi’s 33,000 union workers. Delphi’s proposal to the court is expected to also include plans to shut down as many as 14 of its 18 unionized plants, according to reports in The Detroit News.

Delphi, the world’s second-largest auto parts manufacturer, filed for bankruptcy in October and set plans to dramatically downsize its U.S. operations. From the beginning of the bankruptcy proceedings, Delphi has proposed drastic concessions that the two unions have opposed strongly.

Union negotiators rejected Delphi’s last offer of a $50,000 one-time payment in exchange for wage cuts of nearly 40 percent for some workers by September 2007. In November, Delphi sought to reduce hourly wages for production workers to $12.50 an hour from $27. The most recent plan would reduce wages to $22 an hour on July 1 and then to $16.50 an hour on Sept. 3, 2007. At that point, workers would receive a $50,000 one-time payment or “buy-down” New workers would start at as little as $10 per hour.

The buy-down would have gone to only workers in plants Delphi plans to keep. Those in plants slated for closure or sale would work at $22 per hour until their plants are shuttered or sold.

Henry Reichard, chairman of IUE-CWA’s Automotive Conference Board, said it was ?ludicrous? to think the sides could reach agreement in a short time and, in a letter to Delphi’s top negotiator Kevin Butler, made it clear why the company’s proposal was dead on arrival:

[The proposal] is nothing more than lip service to the idea of negotiations while you prepare your motion to rip up these contracts. While I am not a lawyer, I find it hard to believe that Congress intended to let a company ignore a union for months and then expect them to each an agreement in one week that radically transforms their wages and other terms of employment. This is not good faith bargaining.

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