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Vol. 71/No. 28      July 23, 2007

 
UAW approves big concessions to Delphi Corp.
(front page)
 
BY FRANK FORRESTAL  
In a major blow to auto workers, union members at Delphi Corp., General Motor’s largest auto supplier, ratified a four-year contract June 29 that included major cuts in wages, extensive plant closings, and the elimination of the union’s “jobs bank.”

According to a United Auto Workers (UAW) press release, the contract passed by a margin of 68 percent. A total of 7,613 workers from 18 Delphi plants voted in favor and 3,612 voted against.

Union officials said the givebacks were necessary because Delphi had threatened to seek deeper concessions in bankruptcy court.

“We have trust in our negotiations and no faith in [bankruptcy court] Judge Drain,” Art Reyes, president of UAW Local 651, told the New York Times. “Putting this back in his hands would have been devastating. The sacrifices that I’m making will be well worth it.”

The deal chops wages dramatically—from a top pay of $27 per hour to a wage scale of $14-$18.50. It calls for closing or selling 14 of Delphi’s 18 plants. With its ratification, Delphi ends the jobs bank, a union provision that allowed workers to receive 95 percent of their pay after being laid off.

The new contract is “cheering the domestic auto industry” said an article in the Wall Street Journal. In response to the deal, GM shares rose 81 cents on Wall Street. One investment company, CRT Capital Holding LLC, estimates that the agreement will reduce Delphi’s UAW membership to 1,600 from about 18,300 by 2011.

The union's national membership has sunk to around 500,000—about half the union’s size 20 years ago.

According to the `Journal, the new contract will help the U.S. auto companies “hammer out the type of labor agreements they need to become more competitive” and put them “on better footing to compete with Asia-based rivals such as Toyota Motor Corp.”

The wage-cutting agreement paves the way for national labor talks with Detroit’s Big Three—GM, Ford and Chrysler—which begin in late July. The auto bosses want as much as $10 billion a year in concessions.

"The Big Three need, want, something transformational," said David Cole, president of the Center for Auto Research, according to the Journal. "They will have their Waterloo now. Ron … and the union think incrementally, and would prefer death by a thousand cuts."  
 
 
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