Delphi Staff May Be Offered Buyouts
General Motors Corp. and its former parts-making unit Delphi Corp. may offer some United Auto Workers members as much as $35,000 to retire, a Delphi union leader said.
The enticement is one of several that may be presented to tens of thousands of workers. It is part of a labor accord GM, Delphi and the union are negotiating, said George Anthony, chairman of UAW Local 292 in Kokomo, Ind., who is regularly briefed by negotiators.
“I’m feeling more hopeful now than I did a few months ago,†said Anthony, whose local represents 5,500 workers. “I look for them to announce a settlement on the retirements in the next few days.â€
An agreement would help avoid a strike showdown and allow GM, the world’s largest automaker, to focus on its own plans to eliminate 30,000 factory jobs in North America by 2008, partly via early retirements.
Detroit-based GM is closing plants and cutting jobs after posting losses of $10.6 billion in 2005. The moves come in response to continuing losses in U.S. sales and market share to rivals such as Toyota Motor Corp.
“It’s in nobody’s interest to have a strike,†Fitch Ratings credit analyst Mark Oline said in an interview Monday. “GM will have to step in and bridge any gap that’s left between Delphi and the UAW. Certainly the last thing GM needs now is a strike.â€
One scenario would pay $25,000 to $35,000 to workers who are eligible to retire to get them to take their retirement, Anthony said. Another would speed the retirements of workers who are three years or fewer away. A third would let a worker retire and return at a lower wage.
UAW spokesman Paul Krell had no comment. GM spokesman Dan Flores and Delphi spokesman Lindsey Williams said that talks were continuing and that they had no information on a settlement.
Encouraging workers to retire is a way to limit the number of people in Delphi’s job bank, said Burnham Securities Inc. analyst David Healy. GM and Delphi agreed to pay union workers almost all of their full pay and benefits, even if there wasn’t work for them to do in a factory.
Delphi Chief Executive Steve Miller has said he wants to eliminate 20,000 of Delphi’s 33,000 U.S. workers, including about 4,000 currently in the Delphi job bank. As part of Delphi’s 1999 spinoff agreement from GM, some of those Delphi workers would be eligible to return to GM.
Miller plans to ask a U.S. Bankruptcy Court judge for permission to tear up labor contracts March 31 if the unions don’t agree to both hourly wage and workforce cuts.
Miller has said he needs to reduce hourly wages at the Troy, Mich.-based company to $12.50 from $27 and get workers to pay more for their healthcare. The UAW and other Delphi unions have threatened to strike should the court allow Miller to impose new terms.
GM announced March 16 that it expected to report costs of $3.6 billion for 2005 to help Delphi. In 1999, when Delphi was spun off, GM agreed to pay for the retirement costs of some Delphi workers if the parts maker couldn’t meet its obligations.
Delphi has delayed filing its 2005 annual financial report with the Securities and Exchange Commission, citing the uncertainty of labor negotiations. The filing won’t be made “until the outcome of the current discussions is better understood,†Delphi said March 17.
