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Delphi Bankruptcy Update
IUE-CWA Automotive Conference Board
United
States
October 21, 2005
Delphi promised – and delivered – a "tough message" as the presidents and chairmen of the IUE-CWA-represented plants under the national agreement sat down with the corporation for the first time since its bankruptcy
filing. Meeting in Troy, Mich., yesterday Delphi handed over its initial proposals to modify the current IUE-CWA national agreement and the local contracts. Delphi stated it wants to reduce its IUE-CWA hourly employment from the current 8,500 workers to just around 3,000 through plant sales, plant closings, retirements and layoffs. Delphi stated it plans to sell or close six of IUE-CWA's 10 facilities. "We will work with you to keep jobs for our members, but we will not have our dignity taken away from us," said IUE-CWA President Jim Clark in response to Delphi's extensive concessionary
proposals.
Delphi proposed significant cuts in wages and benefits, including lowering wages to around $9-$10 an hour for production workers, eliminating COLA, dropping dental and vision coverage, reducing holiday and vacation allowances, and having workers pick up a bigger portion of health care costs. "We will move forward cautiously and deliberately," responded Automotive Conference Board Chairman Henry Reichard, but he warned that the end result must be "jobs worth having." He added, "This can't just be a wish list. You have an obligation under the bankruptcy code to provide
documentation.
"Delphi stated that its current intention is not to terminate the pension plan, but reserved the right to terminate the pension plan later if necessary. Instead it proposes to freeze accrual of credited service effective January 1, 2006.The IUE-CWA leadership questioned Delphi's ability to turn the company around even if granted its proposals given its inability to make a profit at plants where IUE-CWA already has entered into competitive agreements. "You're trying to fix a fix plan," Clark said. "Delphi's batting average is not real
good.
"Local unions expressed their deep disappointment in Delphi's proposal, noting that they cannot believe the company would seriously believe the union would consider its provisions, which would roll back 70 years of collectively bargained
progress.
Delphi's proposed contract also would eliminate all job security provisions, successor clauses, the job bank and any right to
strike. The day-long meeting started with a dire financial outlook that reviewed the economics behind Delphi's filing. Simply stated, said John Sheehan, who has now been named as chief restructuring officer, Delphi's "uncompetitive labor agreements" and General Motors' declining market share, was an "unsustainable" working model. "It's like we we're running a business by borrowing on a credit card and we've hit our limit," Sheehan
said.
Delphi said that since it cannot make customers pay more and cannot make GM's market share increase, it was forced to file for bankruptcy due to continuing losses in its North American operations, looming payouts due to the pension fund and large legacy
costs.
"This is not the result of the employees, and it's not a problem with union leadership," said Human Resources Management Vice President Kevin Butler. "Circumstances have over taken
us.
"IUE-CWA is evaluating the proposals and drafting additional information requests in response. It will contact the corporation to schedule negotiations once that process is
completed. "These are difficult times and today we were given a cold shower," said Reichard. "But remember that this is just the first proposal, and now we go to work. We will do everything we can to make significant improvements. We have several options available to us, but the first step is to negotiate in good faith for the members and families depending on us."
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