Autoworkers brace for more pain

As GM targets more plants for closing, it is also considering reacquiring some of its former Delphi Corp. factories.

STAFF/WIRE REPORT

Fear of more plant closures and other cuts that are likely to cost thousands of jobs is spreading through General Motors Corp. and Chrysler LLC as the companies approach a Feb. 17 deadline to show the government they can be viable.

General Motors Corp. is in talks with its former parts arm Delphi Corp. about taking back some Delphi factories that make key parts for GM vehicles, a person familiar with the negotiations said Monday.

A local union official said he hadn’t heard of the report but was interested in the possibility of local Delphi plants rejoining GM. More details would have to be released before union leaders could judge the potential change, said Tom Krolopp, shop chairman of Local 717 of the International Union of Electrical Workers.

He said transferring over to GM sounded good initially, but then he noted that the automaker has its own financial problems. “We’ve already been through one bankruptcy,” he said.

Local Delphi Packard Electric plants are part of Michigan-based Delphi, which has been operating under Chapter 11 bankruptcy protection for more than three years. A source told The Associated Press that GM is worried that the plants could shut down if Delphi runs short of cash, crippling GM’s production.

The person, who asked not to be identified because the talks are private, said the talks have been under way for several weeks and may not lead to any takeover of the plants. GM has had the option to take back factories in its 1999 agreement to spin off Delphi as an independent parts supplier.

Delphi plants make thousands of key parts for the Detroit-based GM’s vehicles including its top selling pickup trucks, the Chevrolet Silverado and GMC Sierra.

The interests of GM and Delphi remain intertwined because Delphi is GM’s biggest supplier, providing more than 1,000 parts for GM pickup trucks.

Area Delphi Packard plants produce components for wiring harnesses for a variety of vehicles. These components include cable and plastic and metal parts.

Hourly employment in the region has been cut from 3,800 to 750 since the bankruptcy filing and 99 workers were laid off at the end of December because of slow vehicle sales. Packard also has temporary layoffs each week that vary by number but are fewer than 100, Krolopp said.

Delphi spokesman Lindsey Williams said Monday that the company continues to be in talks with GM — as well as Delphi’s debtor-in-possession lenders — as it works to emerge from bankruptcy protection.

The company has been trying to sell off plants it has defined as “noncore” — those that make brakes, chassis, instrument panels, door modules and steering components.

Delphi has been operating under Chapter 11 protection since October 2005. It was forced to redraw its reorganization plan after a group of investors pulled out of a deal last spring that would have allowed it to emerge from court protection.

Attorneys for the company have said that it needs to re-examine its plan in light of the significant turmoil that has hit the capital markets, the auto industry and the overall economy since its last revision on Oct. 3.

The company last week asked a bankruptcy judge to allow it to cancel health care and life insurance benefits for 15,000 current and future salaried retirees, citing the steep downturn in the overall auto industry in recent months.

Both GM and Chrysler must prove to the government that they are able to repay the federal loans that are keeping the companies afloat in the worst U.S. auto sales climate in 26 years. GM has received $9.4 billion and expects to get $4 billion more, while Chrysler has received $4 billion and is hoping to get another $3 billion.

That means the automakers will have to make substantial cost cuts. The companies are required to show the government they can achieve “positive net present value,” which means that the current value of a company’s expected net cash flows exceeds the initial investment in the company.

GM Vice Chairman Bob Lutz, in an interview with The Associated Press on Monday, wouldn’t give details but conceded that GM will have to get smaller in the U.S. before it can grow again. He added that GM will grow in other parts of the world such as China.

GM is considering further white-collar job cuts on top of the 3,460 who took buyout and early retirement offers last fall. While the number exceeded the target of 3,000, the company said it would have to make further cuts as the U.S. auto market worsened, perhaps with only standard severance packages.

GM is expected to announce multiple plant closures on or before the Treasury Department’s Feb. 17 deadline for the viability plan, and officials with the United Auto Workers union are worried that several parts stamping, engine, transmission and vehicle assembly plants could get the ax.

GM and Chrysler must present their plans to the government by Feb. 17, but they do not have to have them completed until March 31, when the government can demand repayment of the loans if it decides the companies can’t become viable.