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   Vol. 69/No. 41           October 24, 2005  
GM auto parts supplier files
for bankruptcy; to slash wages, jobs
(front page)
WASHINGTON—The largest U.S. auto parts supplier, Delphi, announced October 8 it has filed for bankruptcy protection. Company executives had been threatening for weeks they would do so unless the United Auto Workers (UAW) agreed to reopen its contract and accept huge cuts in wages and benefits, which the company may now try to impose unilaterally. The Delphi bosses have also asked their former parent company, General Motors, for a bailout estimated at $6 billion.

Delphi is seeking to cut wages for skilled workers from an average of $30 an hour to $19. Wages for production workers would be cut from an average of about $26 an hour to between $10 and $12. Cost-of-living allowances would be eliminated. Vacations would be cut from six weeks to four, and holidays reduced. Health-care payments by production workers would be increased to match that being paid by salaried employees. A jobs bank that currently pays the wages of workers on long-term layoff would be eliminated. Delphi also want to consolidate, phase out, or sell the majority of plants over the next three years, according to a UAW Local 292 negotiations update.

The union reported that Delphi had taken the position that regardless of what the UAW agrees to, GM must provide billions in financial support. GM created Delphi as a separate company in 1999. By allowing the parts supplier to go into bankruptcy, the Wall Street Journal said, GM could end up owning the better part of a restructured Delphi with a workforce paid less than half of current wages.

GM is also asking the UAW for concessions in health care. Heavily weighted towards production of large sports utility vehicles and trucks, GM lost $2 billion in the first half of 2005. Delphi, which does half its business with GM, lost $4.8 billion last year. Standard and Poor's credit rating agency lowered Delphi’s credit rating to triple C minus, two notches below junk bond level, the Detroit News reported.

“If Delphi files bankruptcy,” said the union prior to the filing, “the above proposal they made to the UAW will look better than the restructuring proposal it submits to the courts. It is clear that in one form or another, there is a restructuring of Delphi forthcoming.”

The UAW represents 25,000 workers at Delphi in 38 U.S. plants. The parts supplier has 185,000 employees worldwide in 38 countries—nearly 150,000 of whom are unionized. Delphi had already announced plans to cut 8,500 jobs, including 3,000 in the United States. The bankruptcy filing affects only the company’s U.S. operations.
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