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Delphi delays motion to void union contracts


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Delphi delays motion to void union contracts

Friday 17 February 2006, 10:46am EST

By David Bailey

CHICAGO, Feb 17 (Reuters) - Bankrupt auto parts supplier Delphi Corp. on Friday said it would delay to the end of March filing court papers to void its labor contracts and to cut retiree benefits, citing progress in talks with unions and its former parent General Motors Corp.

A filing, which could have come as early as Friday, would not immediately have led to a strike at Delphi, which in turn would quickly cripple U.S. automaker GM. However, it was seen as likely heightening tensions in the complex negotiations among the three groups.

Delphi filed the biggest bankruptcy in U.S. automotive history last October amid market share losses at GM and wage and benefit costs inherited from the world's largest automaker when it spun Delphi off in 1999.

Delphi said it would file the motions no later than March 31 if it cannot reach an agreement with GM and the unions to slash U.S. wage and labor costs. The new date is firm, while prior deadlines had been flexible.

Discussions so far have helped frame the concerns for each group, though major obstacles and difficult issues remain, Delphi Chief Executive Steve Miller said in a statement on Friday.

"It is a small, but positive sign," Morningstar analyst John Novak said. "They still have a ways to go. Reaching a win-win is going to be extremely difficult."

GM's interest in Delphi is two-pronged: Delphi's parts production is crucial to its operations and the automaker remains liable to cover benefits shortfalls for Delphi's hourly workers under the terms of the 1999 spinoff.

BILLIONS AT STAKE FOR GM

Analysts believe GM could burn through billions of dollars per month if it was forced to shut down its North American operations because of a parts-choking strike at Delphi.

From the outset, Delphi has said that it must cut its labor costs in the United States drastically, and close a significant number of plants, drawing heavy opposition from its unions.

Delphi is not the only auto parts maker seeking wage and benefits cuts through court protection.

Tower Automotive Inc. (TWRAQ.PK: Quote, Profile, Research), which also filed for bankruptcy in 2005, has asked a bankruptcy judge to toss out its labor contracts, with a hearing set to start on Feb. 27. Union hourly workers at Tower have authorized leaders to call a strike if a judge voids their contracts.

At its bankruptcy filing, Delphi had about 34,750 U.S. hourly workers, including roughly 24,000 represented by the United Auto Workers and 8,500 by the industrial arm of the Communications Workers of America.

Delphi, GM and the UAW released statements within minutes of each other on Friday, signaling a coordinated announcement that talks were ongoing, but acknowledging that much work remains.

The UAW said the delay was "certainly a positive action," while GM said its goal remains to pursue an outcome that serves its stockholders' best interests and enables Delphi to remain an important supplier to the world's largest automaker.

Delphi had said it could defer filing with bankruptcy court in New York if it saw sufficient progress toward an agreement. A hearing would have been scheduled to start on March 21.

Shares of GM were up 31 cents, or 1.39 percent, at $22.59 Friday on the New York Stock Exchange. The automaker's bonds were up 1-1/4 point early in the day and rose another 1/2 point after the Delphi news, according to MarketAxess.

Link: http://today.reuters.com/business/newsarti...5&imageid=&cap=

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One by one, they'll fall. They should focus their attention on unionizing the other manufacturers instead of milking a dry cow but alas they'll never learn.

Delphi delays motion to void union contracts

Friday 17 February 2006, 10:46am EST

By David Bailey

CHICAGO, Feb 17 (Reuters) - Bankrupt auto parts supplier Delphi Corp. on Friday said it would delay to the end of March filing court papers to void its labor contracts and to cut retiree benefits, citing progress in talks with unions and its former parent General Motors Corp.

A filing, which could have come as early as Friday, would not immediately have led to a strike at Delphi, which in turn would quickly cripple U.S. automaker GM. However, it was seen as likely heightening tensions in the complex negotiations among the three groups.

Delphi filed the biggest bankruptcy in U.S. automotive history last October amid market share losses at GM and wage and benefit costs inherited from the world's largest automaker when it spun Delphi off in 1999.

Delphi said it would file the motions no later than March 31 if it cannot reach an agreement with GM and the unions to slash U.S. wage and labor costs. The new date is firm, while prior deadlines had been flexible.

Discussions so far have helped frame the concerns for each group, though major obstacles and difficult issues remain, Delphi Chief Executive Steve Miller said in a statement on Friday.

"It is a small, but positive sign," Morningstar analyst John Novak said. "They still have a ways to go. Reaching a win-win is going to be extremely difficult."

GM's interest in Delphi is two-pronged: Delphi's parts production is crucial to its operations and the automaker remains liable to cover benefits shortfalls for Delphi's hourly workers under the terms of the 1999 spinoff.

BILLIONS AT STAKE FOR GM

Analysts believe GM could burn through billions of dollars per month if it was forced to shut down its North American operations because of a parts-choking strike at Delphi.

From the outset, Delphi has said that it must cut its labor costs in the United States drastically, and close a significant number of plants, drawing heavy opposition from its unions.

Delphi is not the only auto parts maker seeking wage and benefits cuts through court protection.

Tower Automotive Inc. (TWRAQ.PK: Quote, Profile, Research), which also filed for bankruptcy in 2005, has asked a bankruptcy judge to toss out its labor contracts, with a hearing set to start on Feb. 27. Union hourly workers at Tower have authorized leaders to call a strike if a judge voids their contracts.

At its bankruptcy filing, Delphi had about 34,750 U.S. hourly workers, including roughly 24,000 represented by the United Auto Workers and 8,500 by the industrial arm of the Communications Workers of America.

Delphi, GM and the UAW released statements within minutes of each other on Friday, signaling a coordinated announcement that talks were ongoing, but acknowledging that much work remains.

The UAW said the delay was "certainly a positive action," while GM said its goal remains to pursue an outcome that serves its stockholders' best interests and enables Delphi to remain an important supplier to the world's largest automaker.

Delphi had said it could defer filing with bankruptcy court in New York if it saw sufficient progress toward an agreement. A hearing would have been scheduled to start on March 21.

Shares of GM were up 31 cents, or 1.39 percent, at $22.59 Friday on the New York Stock Exchange. The automaker's bonds were up 1-1/4 point early in the day and rose another 1/2 point after the Delphi news, according to MarketAxess.

Link: http://today.reuters.com/business/newsarti...5&imageid=&cap=

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That's the whole point. The current situation is totally unfair. People continue to bash GM about every thing from bad product and bad designs but the deck is totally stacked against them. If the unions can't even things up they have to go. Simple economics.

i agree... make it fair grounds...

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