June 30, 2007

Auto Workers Make Major Concessions, Including Pay Cuts, at Delphi, Large Parts Supplier

A year ago, members of the United Automobile Workers union who gathered in Las Vegas brashly reaffirmed their fortitude with Bruce Springsteen's rebellious lyrics, ''No retreat, baby, no surrender.''

This week, less than a month before the U.A.W. begins negotiating a new contract with Detroit's automakers, its members at the Delphi Corporation voted to accept some of the largest concessions that the union has ever given to an employer -- and cuts that its leaders had vowed to fight, even if a strike proved necessary.

Workers at Delphi, the bankrupt auto supplier, agreed to a deal that cuts many longtime employees' pay by almost half and eliminates a 23-year-old job-security provision known as the jobs bank.

The deal, which covers 17,000 hourly workers, was supported by 68 percent of Delphi workers who voted, the U.A.W. said Friday.

To be sure, the agreement, which was reached this week after two years of talks and still requires a bankruptcy judge's approval, cuts pay less than Delphi originally demanded.

But labor experts say the U.A.W.'s overwhelming support for the deal suggests that automakers may be able to get other union members to accept cuts this summer.

''The auto industry uses pattern bargaining,'' said Oren M. Levin-Waldman, a professor at the Metropolitan College of New York's Graduate School for Public Affairs and Administration who has written extensively about wage and labor issues.

Pattern bargaining involves the union's reaching a deal with one company, then persuading other employers to accept the same terms.

''If you make significant concessions on this one, it's highly probable that the corporate negotiators will look to get similar concessions,'' Professor Levin-Waldman said.

''From management's standpoint, they will think they are going into negotiations from a position of relative strength.''

Many of those who supported the wage-cutting agreement say they had little choice but to do so. Without a ratified deal, Delphi had asked Judge Robert D. Drain of Federal Bankruptcy Court in Manhattan to impose deeper cuts on workers.

If that had happened, the U.A.W.'s president, Ron Gettelfinger, had threatened to strike, a move that would have crippled General Motors, Delphi's largest customer and former parent.

''We have trust in our negotiations and no faith in Judge Drain,'' said Art Reyes, president of U.A.W. Local 651, which represents 1,100 workers at Delphi's Flint East plant in Michigan. ''Putting this back in his hands would have been devastating. The sacrifices that I'm making will be well worth it.''

Mr. Reyes is one of only about 100 members of Local 651 whose hourly wages will be cut from the current $27 to a range of $14.50 to $18. Those workers were with Delphi before General Motors spun off the unit in 1999 and have been paid according to the rates they earned while at G.M.

Most workers at the Flint East factory, as well as more than three-fourths of Delphi's other employees, were hired on temporary assignments last summer and made permanent in November. Their pay will remain about the same, starting at $14 an hour; some may even get a raise.

About 94 percent of those from Local 651 who voted Thursday supported the deal, which keeps the plant open and transfers it back to G.M.'s portfolio.

''It's a good agreement -- very good for their families and this community,'' Mr. Reyes said. ''Being back under the umbrella of G.M. is a comfortable feeling after going through 'Hurricane Miller.' ''

He was referring to the strained relationship between the U.A.W. and Delphi's executive chairman, Robert S. Miller, who joined Delphi shortly before it filed for bankruptcy protection in 2005.

Mr. Gettelfinger has repeatedly criticized Mr. Miller and Delphi's managers for demanding that workers take pay cuts while awarding themselves bonuses.

The bonuses were a reason the 1,200 workers at Delphi's plant in Lockport, N.Y., voted against the agreement by a nearly 4-to-1 ratio.

Paul Siejak, president of Local 686 in Lockport, one of only four factories in the United States that Delphi plans to keep, said the workers were ''deeply upset'' about how much they would have to give up.

Most are longtime employees who are on the pay scale with wages that are being cut the deepest.

''This company had enough money to pay their lawyers and their executives, but when it comes down to the people who build the products and come in every day to work hard, they're asked to take wage and benefit cuts,'' Mr. Siejak said.

''People have developed a lifestyle around a certain wage and benefits. They have mortgages and kids to put through college.''

In exchange for accepting the lower wages, workers can get three annual ''buy down'' payments of $35,000, for a total of $105,000.

They can also elect to take a buyout of as much as $140,000 to leave their jobs and give up all benefits except pensions. Those already eligible to retire could accept an incentive of $35,000 to retire with full benefits.

The payments will be financed largely by G.M., which expects its liability for Delphi's bankruptcy to reach $7 billion.

The agreement lets Delphi eliminate the jobs bank, a provision in Detroit automakers' contracts that allowed workers to receive most of their pay after being laid off.

Instead, a layoff would result in severance pay of $1,500 for every month of service, to a maximum of $40,000.

The decision to toss out the jobs bank at Delphi comes about four weeks before the U.A.W. is scheduled to open national contract talks with G.M., the Ford Motor Company and the Chrysler Group.

Executives at those companies also want to eliminate the jobs bank as they seek to become more competitive with foreign carmakers.