Delphi Seeks to Cancel Labor Contracts

Auto parts maker Delphi wants to cancel existing labor contracts. The United Auto Workers union is calling the idea an insult. The former General Motors subsidiary is expected to ask a federal judge for permission to cancel the labor agreements. Delphi is in bankruptcy, and says it needs to cut its wages and benefits to survive.

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RENEE MONTAGNE, host:

The bankrupt maker of auto parts, Delphi, is expected to ask a federal judge for permission to cancel its existing labor contract.

The company is a former subsidiary of General Motors, and it is in bankruptcy, and it says it must sharply reduce wages and benefits in order to become competitive.

Delphi's latest proposal to its unions was quickly dismissed. The United Autoworkers called the offer an insult.

NPR's Jack Speer reports.

JACK SPEER reporting:

General Motors is still the largest automaker in the world, and Delphi its biggest parts supplier. The company employs more than 30,000 blue collar workers, and it now appears ready to ask a bankruptcy court for something it's been unable to get at the negotiating table.

Professor GARY CHAISON (Labor Management Relations, Clark University): There is nothing more confrontational than asking a court to reject a collective bargaining agreement.

SPEER: Gary Chaison is a labor relations professor at Clark University.

Prof. CHAISON: This is a constitution of the workers. This is what they fought for, what they struck for, what they negotiated hard for, and the idea that a court can reject it because an employer wants the court to reject it, and it can be replaced by the employer's proposal, is something that workers will walk off their jobs for.

SPEER: No one expects UAW workers at Delphi to go on strike right away. But a court filing expected later today sets in motion events that could lead to a strike, possibly by mid-June.

George Anthony, the shop steward at UAW Local #292 in Kokomo, Indiana, says there's still time.

Mr. GEORGE ANTHONY (shop steward, UAW Local #292): Hopefully they can come to terms and all three parties can be fairly satisfied. But if not, I think it's going to be disastrous for all three parties if we go out on strike.

SPEER: Because of its historical ties to Delphi, GM has been heavily involved in the negotiations with the UAW. GM has agreed to off-set costs associated with the recent buyout plan for Delphi employees, and hasn't ruled out additional help.

Kevin Tynan is senior equity analyst at Argus Research. He says GM is motivated by fear that a strike at Delphi would quickly hurt GM.

Mr. KEVIN TYNAN (Argus Research): In a worst-case scenario it's not going to make a difference if they're stockpiling parts, looking for other suppliers. Delphi's too big a part of what General Motors does to really ride out something that goes for a number of weeks or months.

SPEER: There are estimates a strike at Delphi would cost GM as much as eight billion dollars within 60 days.

Peter Cappelli is a professor of management at the Wharton School. He agrees the stakes are high for GM and Delphi, but he says after months of negotiating, the UAW faces risks of its own.

Professor PETER CAPPELLI (management, Wharton School, University of Pennsylvania): This in some ways is almost like an end-game at Delphi, because the bankruptcy judge may take away virtually everything. So you know, it's hard to imagine how it goes on from here. This is playing out the end of what has been a generation-long set of events.

SPEER: If, as expected, Delphi does ask the court to end its labor contracts, the judge isn't likely to issue a ruling today. The next hearing in the case is scheduled for May.

Jack Speer, NPR News, Washington.

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