Delphi, UAW Locked in Wage War

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Auto parts maker Delphi is demanding unprecedented wage cuts from the United Auto Workers. The company filed for bankruptcy recently, and now the union must choose between drastic cuts or a strike.

FRANK LANGFITT reporting:

I'm Frank Langfitt.

In better days, unions used to win benefits for their members. Today, organizations like the United Auto Workers are just trying to hold on to what they can. John Huber heads the union's Local 1097 at a Delphi plant in Rochester, New York. He says members there are bracing for tomorrow when the company will issue specific demands.

Mr. JOHN HUBER (President, UAW Local 1097): There never has been a time like this. The only other concessionary agreement where we gave back anything was 1982, and we gave up nine paid days off. And people are still talking about that.

(Soundbite of laughter)

LANGFITT: The labor dispute pits one of the nation's most powerful unions against the world's largest auto parts maker. Delphi, which recently declared bankruptcy, makes everything from air conditioning to steering systems. The company employs more than 30,000 hourly workers in the US. Now it says it wants to slash wages and benefits by 60 percent or more, something no major union in the country has ever accepted. Huber, president of the Rochester local, says lower-skilled workers at his plant would go from $19 an hour to as little as 10.

Mr. HUBER: If we have to vote on a contract that offers 10 to $12 for production people, I don't see my people putting up with it.

LANGFITT: But analysts like Charles Craver, a labor specialist at George Washington University, says a strike could be disastrous.

Professor CHARLES CRAVER (George Washington University): Both the employer and the UAW have to decide: `How much are we willing to go to the brink?' If the UAW strikes, Delphi may close down either because they'll move elsewhere or they'll go out of business. If Delphi demands too much, they may force the UAW to go on strike. You always have to consider your non-settlement alternatives, and for the union that means no jobs.

LANGFITT: Delphi was originally part of GM, but the company spun it off in 1999. Still, Delphi faces many of the same problems as the Big Three automakers, including high health-care and labor costs. To appreciate the challenge, consider the plant in Rochester. Union members there enjoy generous health-care coverage which costs them next to nothing. And then there's the wage gap between Delphi's US and foreign workers. The Rochester plant makes fuel systems for trucks, as does another Delphi plant in China, except workers there earn dramatically less. Craver, the George Washington professor, says there's probably no future for such operations in the US.

Prof. CRAVER: What you have to recognize is that down the line, this plant is going to close and the jobs will be in China or somewhere else. Why? For the simple reason that we saw it with shoes, the textiles. You cannot compete in a world where you can get the same work done in another continent for a third, a quarter or even a 10th of what we're paying our US workers.

LANGFITT: In some sense, the United Auto Workers are now paying for past success. When American companies dominated the car market, the union negotiated fat contracts that lifted its members into the middle class. Now it's a different world, and workers at Delphi are afraid of losing their way of life. Rick Wyan(ph) installs machinery at the company's plant in Rochester.

Mr. RICK WYAN (Delphi Employee): I think that everybody is extremely worried and just is hopeful that something can still be worked out.

LANGFITT: Wyan is 50 years old. He makes $30 an hour. He says if he loses his job, he doubts he could find something comparable.

Mr. WYAN: I pretty much know for sure that I would not be able to get another job in the field that I am in right now, because there's just so many people that have been laid off and are out of a job that are doing the same kind of work that I'm doing.

LANGFITT: Even if Wyan found work elsewhere, he could never get the kind of gold-plated health-care benefits he enjoys today. But Delphi says it must slash wages and health benefits to survive. And if the UAW balks at the cuts, the company says it will ask a bankruptcy judge to enforce them. Frank Langfitt, NPR News.

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