Delphi Corp. reports progress in GM talks

GM has given Delphi some financial breathing room.
STAFF/WIRE REPORTS
DETROIT -- Delphi Corp., which filed for bankruptcy last month, said it's making progress in restructuring talks with General Motors Corp. and will delay an effort to reject its union contracts.
Delphi, the largest U.S. auto supplier, was scheduled to ask a bankruptcy judge to void its union contracts Dec. 16. The company said Monday that it's pushing that back to Jan. 20.
"It's in everyone's best interest for Delphi not to file, so this takes the pressure off," Delphi spokeswoman Claudia Piccinin said.
GM shares rose on hopes the negotiations will avert a strike that could fatally wound the already crippled automaker, which is losing U.S. market share and has lost more than $3 billion in the first nine months of this year. GM shares rose 36 cents to $23.22 in trading Monday on the New York Stock Exchange.
"The threat of a Delphi strike is somewhat reduced by this action," said David Healy, an auto analyst with Burnham Securities.
Union response
The UAW called the announcement "a positive sign" but said it won't restart stalled discussions with Delphi until the auto supplier retracts a proposal that would cut hourly workers' wages by nearly 62 percent, from $27 an hour to $10 to $12.50 per hour.
"If Delphi is serious about restarting discussions, taking that insulting proposal off the table would be a good place to start," UAW President Ron Gettelfinger and Vice President Richard Shoemaker said in a joint statement.
Delphi has almost 34,000 hourly workers in this country.
Lauren Asplen, a spokeswoman for the International Union of Electrical Workers, declined to comment on Delphi's announcement. The IUE represents about 3,800 hourly workers in this area who are employed by Warren-based Delphi Packard Electric Systems.
Piccinin wouldn't elaborate on the company's talks with its unions but said Delphi has made recent progress with GM. Delphi is GM's former parts division and the automaker's largest supplier.
Price cuts
Delphi said GM has agreed to temporarily forgo price cuts on some Delphi parts in order to help the struggling supplier. GM bought $14 billion in parts from Delphi last year, or around 16 percent of its total parts spending. The automaker has estimated it pays $2 billion more per year for parts from Delphi's North American facilities than what it could pay on the global market.
GM spokesman Jerry Dubrowski said GM is working toward an outcome that satisfies its shareholders and ensures Delphi's survival. GM spun off Delphi in 1999, and the two companies share common labor agreements.
"It's not in GM's interest, Delphi's interest or the UAW's interest to have a strike," Dubrowski said.
Neither GM nor Delphi would give specifics about the talks. GM has said it could be liable for anywhere from nothing to $12 billion in pensions and benefits for Delphi employees.
Avert a strike
In a note to investors, Goldman Sachs analyst Robert Barry said GM wants to avert a Delphi strike and win UAW approval for its own restructuring. Last week, GM announced a plan to cut 30,000 hourly jobs and close 12 facilities in North America.
In exchange, GM may provide cash for Delphi employee buyouts or may agree to allow Delphi workers to flow back to GM, Barry said.
Healy said negotiating with Delphi is the lesser of evils for GM. In addition to avoiding a strike, GM doesn't want the bankruptcy court to transfer pension liabilities to GM, Healy said.
James McTevia, a restructuring expert involved in the Delphi bankruptcy proceedings, said it's even possible GM would reacquire Delphi.
"They will not let Delphi go out of business," McTevia said.
But GM Chairman and CEO Rick Wagoner said in a recent interview with The Associated Press that GM has no plans to take back Delphi plants.