Delphi’s latest offer to the United Auto Workers union includes an immediate $US5 reduction to hourly wages, followed by a steeper cut in late 2007, local union officials confirmed to Dow Jones.

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The parts supplier’s new proposal also includes a $50,000 incentive payment for workers who stay on past September 2007, according to two union leaders, who requested anonymity, the news agency added.


They reportedly confirmed that Delphi now seeks to lower hourly wages to $22 from $27 an hour, and then to cut wages to $16.50 in September 2007. While better than Delphi’s earlier $12.50 an hour proposal, such a deal will still be hard to swallow, one of the union officials told Dow Jones.


The news agency said leaders from Delphi’s local UAW are meeting in Detroit on Tuesday to discuss the latest offer.


One analyst told Dow Jones the offer, especially the $16.50 wage rate down the road, could entice more people to take last week’s early retirement deal.

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“Last week was the carrot. This is the stick,” Sean McAlinden, chief economist and vice president of research at the Centre for Automotive Research told the news agency. “One of those will make some of them leave.”


The report said General Motors, Delphi’s former parent and largest customer, may subsidise part of Delphi’s new offer, but it isn’t clear how much. One of the union officials reportedly said some of the deal is contingent on Delphi reaching an agreement with GM, and talks between the parties are ongoing.


Dow Jones noted that Delphi is racing against a self-imposed Thursday deadline to forge a comprehensive labour deal with the UAW, which represents 70% of Delphi’s hourly workers, or about 24,000 people. The company has said it will file a motion Friday asking a bankruptcy judge to throw out existing labour contracts if such a deal isn’t reached.