Delphi, UAW reach tentative pact

Hourly pay will be cut from $27 to between $14 and $18.50, sources say.

STAFF/WIRE REPORTS

DETROIT — Struggling auto parts maker Delphi Corp. reached a tentative wage-cutting agreement Friday with its largest union in what may set the pattern for future pay in the U.S. automotive parts industry.

The deal, which still must be voted on by Delphi members of the United Auto Workers, was signed just before a 1 p.m. meeting between the UAW leadership and presidents of the union’s locals.

Delphi has about 6,000 workers in Ohio. This includes fewer than 700 hourly workers at Delphi Packard Electric in the Mahoning Valley.

The local workers are represented by the International Union of Electrical Workers, which is Delphi’s second-largest union. The IUE typically reaches a deal with the company after the UAW agrees to terms.

Details of the UAW agreement were not released, but Delphi said in a statement it’s a “significant milestone” in the company’s quest to emerge from Chapter 11 bankruptcy protection.

Union officials, speaking on condition they not be identified by name earlier this week because the deal had not yet been completed, said the pact would cut wages for longtime UAW workers from about $27 an hour to between $14 and $18.50.

Industry analysts say it could become a template for other parts suppliers.

Strike threats

The pact, if approved, would end the threat of a strike that could have shut down production at General Motors Corp., Delphi’s largest customer. It brings to a close two years of often contentious negotiations in which the UAW threatened to strike and accused Delphi of leading a race to dismantle the middle class.

Troy, Mich.-based Delphi, on the other hand, said it needed lower wages to compete in a global economy.

The former parts arm of GM, Delphi was spun off as a separate company in 1999, filed for bankruptcy protection in October 2005 and asked for court permission to void its labor contracts.

GM is also involved in the agreement announced Friday because it is on the hook for an estimated $7 billion in liabilities for Delphi pension and retiree health care expenses.

Big impact

The deal will have a much broader impact than just on Delphi and General Motors, David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said before the deal was announced.

“It’s a pattern supplier agreement,” said Cole, who added that sales of many factories by suppliers and even Ford Motor Co. have been delayed while Delphi negotiations dragged on. “Nobody’s going to pick up any of these assets unless they have an agreement that they think is going to be competitive over the longer term,” he said.

While it was likely difficult for UAW leaders to agree to reducing wages, the union was probably able to preserve far more than the $9 an hour that Delphi proposed early in the bankruptcy proceedings, said Harley Shaiken, a professor at the University of California-Berkeley specializing in labor issues.

“The agreement reflects the dismal context of the auto parts industry in a global world,” Shaiken said. “The $18 wage is approximately double what Delphi offered immediately after the bankruptcy. So they managed to salvage a much better agreement.”