Delphi's goal is accord, CEO says

Delphi wants to keep negotiating 'until we have a deal,' the CEO said.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
Delphi Corp. is in no hurry to cancel its labor contracts despite filing court motions that seek to do that, the company chief executive said.
Steve Miller said he expects negotiations to continue until a judge rules on the motions, which is expected no sooner than early June.
Even if the judge rules in Delphi's favor, the company will continue negotiating if a deal appears likely, Miller said Monday in a speech to the Detroit Economic Club.
"We're going to keep at it until we have a deal," he said.
On the other hand, the auto supplier "can't just keeping talking and losing money indefinitely," he said.
What was asked
Delphi filed court motions Friday that ask a judge to void its union contracts for current workers and to cancel obligations to pay health care insurance for retirees. A bankruptcy judge in New York has set a hearing for May 9 and 10.
Both the International Union of Electrical Workers, which represents Delphi workers in the Mahoning Valley, and the United Auto Workers have said the bargaining will be more difficult after the filings.
Delphi and the IUE were to meet this week after union officials declined to make a counteroffer to Delphi's cost-cutting package last week.
Miller said that people have overreacted to the filing of the court motions. The automobile industry can survive its current financial problems, just as the steel and airline industries have, he said.
He pointed to Bethlehem Steel, which had bleak prospects four years ago when he was leading the restructuring of that company. Today, the company's operations are thriving under the ownership of Mittal Steel, which has become the world's largest steelmaker, Miller said.
The key to restructuring Bethlehem Steel, as it was for other steelmakers and airlines, was obtaining new labor agreements that helped to make operations more efficient and productive, he said.
With Delphi, the spread is growing between what it pays for labor and what other suppliers pay, he said. The difference in pay and benefits amounts to billions of dollars per year, he said.
The company couldn't continue to absorb those higher costs when vehicle production in North America declined, he said.
None of this is the fault of the workers, but they still must realize Delphi can't carry these costs any longer, he said.
"I don't blame them for being angry. I don't blame them period. But together we have to face a new global reality," he said.
The new realities include lower pay and benefits and revised work rules that allow Delphi to be more productive, he said. Delphi also is counting on cutting its work force through retirements and having some workers flow back to General Motors Corp., its former parent company, he said.
Pay proposal
Delphi has proposed cutting hourly pay of production workers from $27 to $16.50 over time and paying new hires $12 an hour.
Miller said the other parts of Delphi's plan are receiving aid from GM, selling some of its businesses, reducing management staff and benefits, and making pension changes. Delphi said Friday that it intended to freeze pensions but meet its past obligations if it gains approval to stretch out pension payments.
In touring Delphi plants, Miller said workers told him their most-cherished benefit was being able to retire with a full pension and medical benefits after working 30 years. Unfortunately, that can mean someone is retired for longer than they worked, he said.
Delphi said Friday that it intended to reduce its manufacturing sites from 29 to eight and its hourly employees from 34,000 to 12,000. Management staff is to be cut by 8,500, or 25 percent. One of the operations to be kept is Delphi Packard Electric Systems' operations in the Mahoning Valley.
shilling@vindy.com