Delphi to Expand Its Buyout Plan
Delphi Corp. will expand its buyouts of union workers after reaching an agreement with its second-largest union and getting former parent General Motors Corp. to help pay for it.
Under the union agreement reached Friday, about 8,000 members of the International Union of Electrical Workers-Communication Workers of America are eligible for buyouts ranging from $35,000 to $140,000, Delphi said in a statement.
The plan, which includes incentives for early retirements, is subject to Bankruptcy Court approval.
Last week, more than 33,000 United Auto Workers members at GM, the world’s largest automaker, and at Delphi, the biggest U.S. auto parts supplier, had agreed to accept similar incentives to be bought out or retire early.
The buyouts are a key part of plans by GM Chief Executive Rick Wagoner and Delphi CEO Steve Miller to reduce jobs at both companies while avoiding strikes. Workers have until Friday to decide.
“The UAW is key but it’s not the only union, and the agreement with the IUE helps to move the process along,” said Harley Shaiken, a labor professor at UC Berkeley. “There are not many alternatives out there, and these buyouts, depending on the details, can help make it a soft landing for workers.”
Friday’s accord came 11 days after Henry Reichard, the electrical workers union’s chief negotiator, died at 55 of a heart-related problem. The union picked Willie Thorpe, 56, as Reichard’s replacement.
Under the plan, GM will assume the financial obligations related to the lump-sum payments to be made to eligible Delphi U.S. hourly employees accepting normal or voluntary retirement incentives.
“We continue to be focused on the transformation of Delphi, and this attrition plan provides a stronger framework to position our successful emergence from Chapter 11,” Delphi President Rodney O’Neal said in the statement.
GM wants to eliminate 30,000 jobs and close 12 manufacturing plants and parts depots by 2008. Delphi, which is based in Troy, Mich., has been in bankruptcy protection since Oct. 8 and intends to shutter 21 of 29 U.S. manufacturing locations.
As part of GM’s 1999 spinoff of Delphi, the automaker agreed to cover retiree and healthcare costs for former workers if Delphi was unable to meet those obligations. Detroit-based GM has said a Delphi bailout might cost it $5.5 billion to $12 billion, though probably closer to the lower end of the range.
Thorpe served eight years as benefits director on the electrical workers union’s automotive conference board. He led benefit talks during negotiations in 1999 and 2003 with Delphi and GM.
Delphi shares gained 21 cents, or 14%, to $1.73 on Friday. The stock has risen almost sixfold this year after plunging 97% in 2005. GM shares rose a penny Friday to $25.60.
