The Greed of the American Government & Companies is & has been Devouring America & it's People

GM parts supplier asks court to void union contract as part of "bankruptcy"

Associated Press

April 1, 2006

Auto-parts supplier Delphi Corp. unveiled a broad restructuring plan Friday that would cut 8,500 salaried jobs and shut a third of its plants worldwide. It also asked a bankruptcy court judge to void its labor agreements in a move that sent a shudder through the auto industry.

The United Auto Workers warned "it will be impossible to avoid a long strike" if the judge agrees to void the contracts and Delphi imposes its most recent wage proposal. A strike could put General Motors Corp., Delphi's former parent and largest customer, perilously close to bankruptcy and hurt other automakers and smaller suppliers as well.

GM and Delphi have deep ties. GM accounted for just under half of Delphi's $26.9 billion in revenue last year and is required to pay some Delphi pension obligations if Delphi is in bankruptcy.

Delphi filed a separate motion asking the court to reject some unprofitable contracts with GM. The company also said it will freeze its hourly and salaried pension programs later this year and move employees into a defined-contribution plan.

Delphi's motion to void its labor contracts was widely expected; the company had delayed similar motions three times before.


Commentary by Madeline at Unknown News.com:

After declaring bankruptcy, a major auto-parts supplier wants to reduce costs by shredding its union contracts. The company, Delphi, is a former unit of General Motors, and GM itself is expected to pursue the same tactic soon.

Of course, if the employees of Delphi or General Motors need to declare bankruptcy because their wages have just been cut in half and they've lost their health insurance, they're SOL -- thanks to the recent changes in bankruptcy law.

In George W's America, only corporations have rights, and only individuals have responsibilities.


Madeline

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Judge Robert Drain has scheduled a hearing on Delphi's request for May 9-10 and won't decide whether to void Delphi's contracts until after that hearing.

Delphi also plans to cut 25 percent of its global salaried work force, or around 8,500 workers, including up to 40 percent of its corporate officers. Delphi said that should save $450 million per year.

The company has identified eight U.S. plants that are considered critical to its U.S. operations. Delphi said those plants will focus on profitable parts such as safety features, electronics, diesel and gas powertrains and climate-control products. Twenty-one other U.S. plants that do not make core products -- including those that make brakes and chassis, instrument panels, door modules and steering components -- would be sold or closed by 2008 under Delphi's plan.

Delphi's motion that the court reject unprofitable contracts with GM covers around half of Delphi's annual volume with GM. Delphi said the judge is expected to consider the motion May 12, which gives both companies time to continue negotiating prices.

Delphi also said it will freeze pension benefits for hourly workers Oct. 1 and for salaried workers Jan. 1 and will replace them with plans that require employee contributions with company matches. Workers will still have access to any accrued benefits.