The NewStandard ceased publishing on April 27, 2007.

Union to Fight Delphi over Worker Pay Cuts, Executive Raises

by Brendan Coyne

Oct. 13, 2005 – Terming last weekend’s bankruptcy filing by Delphi Corporation a "bitter pill" and pointing to company plans to award executives for staying with the company as it restructures, the United Auto Workers (UAW) is signaling that it is preparing for a showdown with the nation’s largest auto-parts manufacturing company.

Email to a Friend
Print-friendly Version
Add to My Morning Paper

In a statement following the Saturday Chapter 11 bankruptcy filing by Delphi Corporation, both UAW President Ron Gettelfinger and Vice President Richard Shoemaker noted the extreme disparity in pay between the executives who are to receive bonuses – as much as 250 percent of their current salary for some – to remain with the company at the same time that it is demanding pay cuts of more than half from workers on the shop floor.

Even worse, union leaders said, was Delphi’s announcement Friday that it was upping the terms of severance packages for senior executives. "Delphi’s decision would be extremely disappointing under any circumstances," Gettlelfinger and Shoemaker wrote, "but it is all the more so in light of the company’s announcement on Friday – just one day before filing bankruptcy – that it had sweetened the severance packages for Delphi’s 21 most-highly compensated executives because the old severance package was – as a Delphi spokesperson put it – ‘uncompetitive’.".

In a letter circulated among leaders of union locals representing Delphi workers Monday, the union said: "It is outrageous that US bankruptcy laws allow corporations to get away with this kind of behavior." The national union leadership continues to say it is open to negotiating new terms with Delphi.

The UAW charges that Delphi would like to retain over 400 senior executives – at a cost of $90 million – as part of a plan to drastically alter the way the company is organized, even as it is trying to force workers to accept pay at half their current salary, in addition to bearing a greater burden for health care and retirement.

The company reiterated the terms of its severance package for company executives on Tuesday. In exchange for eighteen months in compensation, departing Delphi officials will have to agree to an eighteen-month bar on taking a position with a competing company, according to the Detroit Free Press.

Delphi has not yet submitted its full reorganization plan to the court, but initial plans call for retaining 486 executives and offering them bonuses ranging from 30 percent of current salary to 250 percent for some. Additionally, the company proposes to offer stock as extra compensation.

Meanwhile, Delphi is looking to drastically slash employee pay – proposing cuts of over 50 percent for some – and to close an unspecified number of plants. The plant closure will result in significant layoffs, though the company has yet to state how many jobs it expects to cut or plants to close.

Ruling on preliminary motions Tuesday, US Bankruptcy Court Judge Robert D. Drain granted approval to a $950 million loan toward restructuring from a group of financial brokers led by JP Morgan Chase Bank ands Citigroup Global Markets, the company announced yesterday.

Following Tuesday’s court decision, Delphi attorney John Butler Jr. sought to assuage employee concerns, stating: "We want all of our hourly employees to know we have no intention of coming to court on this particular issue. We can deal with it at a bargaining table at a later date," the Free Press reported yesterday.

While national union leaders continue to hold out an olive branch, even as they ratchet up the rhetoric, a local in Western New York has issued a call for strike readiness.

In a newsletter Monday, UAW Local 686 leaders reassured members that current contract protections remain in place but reminded them to be prepared to walk off the job should the Bankruptcy Court unilaterally alter the current deal.

"If negotiations reach impasse, the bankruptcy court could determine the terms of our employment agreement with Delphi," the newsletter stated. "Should this happen, the ‘no strike’ clause is lifted and the UAW has the right to authorize a strike. We all need to prepare for this possibility."

Local 686, which represents around three-quarters of Delphi workers at a Lockport, New York plant, also expressed concern that the company would try to shift domestic jobs overseas. Only US Delphi holdings are subject to the bankruptcy terms.

The Lockport plant employs between 3,800 and 4,000 people in a region of the state with a withering economy. Delphi holds a $20 million grant for the facility and receives state-subsidized power, the Buffalo News reported.

Governor George Pataki has met with Delphi officials to discuss possible state bail-out money, the paper noted.

No such offer has been made to union leaders.

Send to Friends Respond to Editors or Reporter

The NewStandard ceased publishing on April 27, 2007.

Brendan Coyne is a contributing journalist.

Recent contributions by Brendan Coyne: