General Motors Corp. is unlikely to reach a deal to help its biggest parts supplier negotiate new money-saving contracts with its unions by Feb. 17, the automaker's chairman and CEO Rick Wagoner said Wednesday.
That's the day Delphi Corp. can begin a bankruptcy court process to cancel its old union contracts.
Delphi has threatened to do just that if its blue-collar workers don't accept significant reductions in jobs, pay and benefits. Its six unions have banded together in a coalition led by the United Auto Workers and threatened to strike if its contracts are nullified -- a walkout that could quickly shut down most if not all GM assembly plants in the United States, Mexico and Canada.
To avoid that, GM has offered to help Delphi and unions come to terms even if the automaker must allow some Delphi workers to take jobs at GM, and spend billions of dollars on buyouts, wage subsidies and other incentives for Delphi workers to accept the cost-cutting contracts.
"Obviously, there's a lot of work to do between now and" Feb. 17, Wagoner told reporters Wednesday at GM's White Marsh, Md., transmission plant. "So I think that would be, that's a pretty short time frame. I can't guess we'd be there by the 17th, but if something should break through, terrific."
Delphi was once GM's parts-making subsidiary and spun off as an independent company in 1999. But it has never been consistently profitable, losing $4.8 billion in 2004. After losing another $741 million in the first six months of 2005 it filed for Chapter 11 bankruptcy protection on Oct. 8.
The parts maker says it is burdened with restrictive labor contracts that require it to pay far more than its competitors. The Troy-based company says its 34,000 U.S. hourly workers make $27 an hour -- $76 an hour when benefits are added. It wants to cut 24,000 hourly jobs from its U.S. workforce and reduce the wages to an average $12.50 an hour, or $35 an hour when benefits are added.
But fearing the threat of a UAW strike at Delphi, Wagoner met with Delphi CEO Steve Miller on Nov. 24 to discuss a plan for temporarily forgoing price reductions GM had demanded on parts it buys from Delphi. GM Chief Financial Officer Fritz Henderson said Jan. 26 that GM will spend between $3.6 billion and $12 billion in benefit guarantees for some former workers who were moved to Delphi.
Delphi spokesman Lindsey Williams said discussions with GM and the UAW are progressing. UAW spokesman Paul Krell said Feb. 17 is not a deadline but merely the first day Delphi could exercise its option to file a motion to reject contracts.
"And there'll likely be a four- to six-week interval between the initial filing and an actual hearing," Krell said. "Then the judge has a 30-day window to render a decision. It could be well into the spring."
All three parties, in a cold war of sorts, have enough leverage on each other to force discussions. GM has bailout money. Delphi has the ear of U.S. Bankruptcy Judge Robert D. Drain. The UAW has about $900 million in its strike fund, enough resources to wreak havoc on the entire industry for months.
Wagoner said Delphi supplies GM with a huge range of parts, and any impact would have to be assessed on a plant-by-plant basis.
"Things will play out as they do. But I don't think it's in anyone's particular interest to get into work stoppages at Delphi," Wagoner said. "That's not going to solve the issues. It's more substantive than that."
Labor strife at Tower Automotive Inc., a Novi-based auto supplier, is an example of what lies ahead if a deal is not reached and Delphi files its motion Feb. 17.
Hourly workers at Tower gave authorization to strike if the supplier of assemblies and suspension modules uses the bankruptcy court to cancel its union contracts.
