BY HOLLY HARKNESS
DETROIT - In a major cost-cutting move, General Motors Corporation announced plans August 3 to spin off its Delphi Automotive Parts unit to investors. Delphi has 200,000 employees worldwide, about one-third of GM's total employment. About 50,000 Delphi workers are members of the United Auto Workers (UAW) in the United States.

The announcement came just days after GM and the UAW settled strikes at two GM plants in Flint, Michigan, including the Delphi East plant. Key issues in the strikes were the outsourcing of jobs and GM's threats to sell or close its less profitable operations.

Under the agreement reached July 28, the company had promised not to sell the Flint plant or two Delphi brake plants in Dayton, Ohio, until Jan. 1, 2000. In return the UAW agreed to a no-strike pledge at those locals until the expiration of the national agreement in September 1999. GM said it would honor their agreement at the three plants.

The decision to spin off the Delphi unit marks a significant change in GM's decades-old practice of producing their auto and truck parts in-house. Its main U.S. competitors, Ford and Chrysler, sold off or closed many of their parts plants in late 1970s and early 1980s. This has helped them get an edge on GM by buying parts cheaper from outside suppliers who don't fall under the "Big Three" auto contracts.

As an independent company, Delphi will still sell its products to GM, but GM will also be freed up to buy parts from other auto parts makers at lower prices. This will increase the pressure on Delphi to cut costs, including closing "unprofitable" plants and slashing workers' wages and benefits.

Donald Runkle, vice president and general manager of Flint- based Delphi Energy and Engine Management Systems, told the Flint Journal that wages were an important factor in Delphi's ability to become competitive. "I don't want to say a two- tier or three-tier [wage structure] is the way to do it. We will have to sit down with the union."

Workers at Delphi East had a mixed reaction to the announced spin off. Many wondered what effect it would have on their retirement benefits.

"It'll be good for Delphi, just to get them away from GM," Neil VanAlst, a fuel pump job setter, told the Flint Journal. "Once GM gets out of it, the business will probably run a heck of a lot better."

Then he added, "It's just another step for them being able to sell the plant and cut my wages. It just depends what they end up doing, and I can't see them doing anything to benefit me."

UAW vice president Richard Shoemaker issued a statement following GM's announcement. He said the union opposed the Delphi sale and pledged to "aggressively work to protect the rights and interests of UAW members impacted by the sale."

On August 4 GM made a second announcement; a sweeping reorganization and consolidation of its sales, service and marketing operations in GM's five divisions: Chevrolet, Pontiac-GMC, Buick, Cadillac and Oldsmobile.

The move is expected to cut $300 million in costs and eliminate up to 1, 000 white-collar jobs.  
 
 
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