Hurdle of $60M delays contract Extra-pay plan 'sickens' union

Long strikes could do irreparable harm to Delphi, a company official said.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
NEW YORK -- Delphi Corp. and its unions are saying they want to reach a negotiated contract settlement, but a $60 million obstacle has arisen.
A plan to give $60 million in extra pay this summer to all 14,000 Delphi salaried workers "sickens" union officials, said Jim Clark, president of the International Union of Electrical Workers.
Clark and Henry Reichard, lead bargainer for the IUE, said during a break in court testimony Wednesday in New York that the planned payments are an obstacle to reaching a negotiated labor deal.
"We'll move on and try to deal with it," Reichard said.
Lawyers for the IUE, which represents 3,800 hourly Delphi workers in the Mahoning Valley, learned about the payment plan while preparing for this week's court hearings. Delphi is asking Judge Robert Drain of U.S. Bankruptcy Court to cancel its labor agreements if contract negotiations aren't successful soon.
What's gone on
The first two days of the hearings have been dominated by union lawyers questioning Delphi officials about its contract proposals, efforts at negotiations and timing of its motion to reject contracts. Delphi lawyers have asked few questions because the witnesses' statements are on file with the court.
Delphi and the unions are battling over whether the company has bargained in good faith, a condition required for the contracts to be rejected.
Hearings will continue Friday and May 24 and 26.
Lawyers for all parties intend to call 34 witnesses during the hearings, but only three made it to the stand in the first two days.
A Delphi lawyer told the judge that the company and unions intend to negotiate during the break between Friday and May 24.
Raising questions
But Tom Kennedy, a lawyer for the International Union of Electrical Workers, questioned the chances of union workers' ratifying an agreement in light of the payments to salaried workers.
Kennedy asked Kevin Butler, Delphi vice president of human resources, how Delphi could expect union workers to approve a labor deal that has concessions in wages and benefits while their supervisors are receiving extra pay.
Butler said passage would depend more on details of the labor deal and the type of "soft-landing" provisions for hourly workers, such as buyouts and relocation bonuses.
Butler called the salaried payments part of Delphi's normal spending and shouldn't be considered bonuses.
The company holds back some of the employees' pay and releases it only if financial targets are met, he said.
Under questioning from Kennedy, Butler said the employees didn't receive the extra pay from 2003 to 2005. Delphi is meeting financial targets so far this year, however, and so the payments will be made if that performance continues through June, he said.
The payments are separate from $38 million in retention bonuses for executives that the judge already has approved.
Strikes' potential
If the judge does cancel union contracts, and long strikes follow, they would be "very harmful" to Delphi, Butler said.
In fact, the damage could be irreparable, depending on the length and timing of the strikes, he said.
He reiterated that Delphi would prefer to have a negotiated settlement.
Kennedy questioned Butler about what would happen to IUE workers as Delphi downsizes its operations. Delphi has said it intends to keep just eight of its 21 plant sites, with its Mahoning Valley operations being one of the eight to remain. Cuts will be made at sites that remain open, Butler said.
The UAW has a deal to allow Delphi workers to return to General Motors Corp., but the IUE doesn't.
Butler said the IUE workers would receive preferential hiring at GM.
Kennedy scoffed at the likelihood of such hiring, asking if this was the same GM that is cutting its own work force and already accepting about 5,000 UAW workers from Delphi.
Butler responded by saying it isn't clear what will happen to the IUE workers who lose their jobs.
Affecting the Valley
Kennedy asked Butler how Mahoning Valley workers would be affected if hourly wages for production workers were cut from $26 to $12.50 as Delphi has proposed. Butler said it would have a significant impact on them.
Kennedy asked if Delphi had looked at how many Mahoning Valley workers would be forced to file for bankruptcy protection under that pay rate. Butler said it had not.
Delphi has proposed that higher wages can be paid if GM, its former parent company, agrees to subsidize the wages. In that case, top wages would be cut to $22 an hour at first and then $16.50 later.
Still on the stand at the end of the day was the next witness, Michael Wachter, an economist from the University of Pennsylvania who conducted a labor market study for Delphi.
His conclusion was that Delphi workers are paid a premium over the average pay of U.S. workers doing similar jobs. Government statistics show machine operators and material handlers earn an average of $13.55 an hour.
Peter DeChiara, a UAW lawyer, battled with Wachter over whether workers who are more productive or who have more responsibility are paid more than other workers. Wachter kept saying the questions were too hypothetical.
Wachter did say, however, that larger companies pay more than smaller ones and auto-parts suppliers pay one-third more than the national average.
shilling@vindy.com.