Bankrupt supplier Delphi is likely to expand a massive early retirement programme to include cash buyout offers for lower-seniority workers, a move that would provide a safety net for thousands more factory workers as the company downsizes under US Chapter 11 bankruptcy protection, the Detroit News reported on Tuesday.
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Over the weekend, the company and the United Auto Workers moved closer to a deal that would mirror an “accelerated attrition” programme now under way at General Motors, people familiar with the negotiations told the paper. An announcement of the expanded Delphi programme could come in the next few days, they said.
Delphi already is offering early retirement packages to UAW workers with 27 years or more seniority. Now it’s preparing to offer lump-sum buyouts of up to $140,000 to workers with less time on the job. Workers who accept lump-sum buyouts would give up all benefits except accrued pensions, the report said.
Citing the “intensive and constructive” talks with its unions over the weekend, Delphi reportedly asked Judge Robert Drain to postpone a hearing on Monday in US Bankruptcy Court on whether the supplier can void its union contracts. Drain granted the motion to allow the two sides to continue negotiations. The hearing will resume on Friday, the Detroit News said.
The paper noted that, in Chapter 11, Delphi has proposed slashing its $US27-per-hour factory wages by more than half and closing or selling 21 of 29 US plants as part of a plan to emerge from bankruptcy by next year. When unions representing its 33,000 US workers resisted those efforts, Delphi on 9 May began a court process to dismantle its labour contracts.
A ruling in its favour would allow the company to make wage cuts unilaterally, but could also push its unions closer to a strike, the Detroit News said, adding that UAW members have overwhelmingly authorised their leaders to call a strike if Delphi wins such a right.
Industry commentators have said a strike would have disastrous consequences for General Motors, Delphi’s former owner and largest customer.
Brad Rubin, an analyst with BNP Paribas in New York, told the Detroit News that Delphi’s request on Monday to keep talking out of court is a good indication that the company is close to an agreement. “I think it’s certainly a positive sign,” he said.
The paper added that, also on Monday, GM accused Delphi of engaging in “blackmail” by threatening to tear up more than 5,000 GM parts contracts and asked a judge to intervene. In papers filed with the bankruptcy court, GM reportedly said Delphi knows that scrapping the contracts could “result in the shutdown of GM plants” that use Delphi’s parts. That would do “irreparable harm” to GM, but its effect on Delphi would be far more severe, the automaker reportedly said.
Drain is scheduled to take up Delphi’s motion to reject the GM contracts on 19 June, the Detroit News said.
