Wednesday, October 26, 2005

Delphi offer: $9 an hour

Ailing supplier lowers bid to UAW; workers asked to pay up to $5,000 yearly for health care.

By Bill Vlasic / The Detroit News

Miller On the table Details of Delphi's latest offer to the UAW: • Base wages of $9.50/hour for existing low production workers, $10.50/hour for high production workers, and $19/hour for skilled trades. • New employee pay would start at $9/hour; $18/hour for skilled workers. • Cost of living allowances and profit sharing would be dropped. Other details • Monthly premiums for health care/prescription drugs of $85 for singles; $170 for couples; $160 for single employee with children; and $240 for families. • Employee health care expenses would be capped at $2,500/year for individuals; $5,000/year for a family. • Dental and vision coverage would be discontinued. • The proposed deal would run from Jan 1, 2006 through Jan. 1, 2012. • Company-paid holidays would total 10 days a year, down from 16, Christmas and Independence Day week holidays would be eliminated. • The pension plan would be frozen on Jan 1 and possibly eliminated. Read the fine print Text of Delphi contract proposal Error processing SSI file Comment on this story Send this story to a friend Get Home Delivery

Delphi Corp.'s first offer to unionized autoworkers since filing for bankruptcy protection calls for an unprecedented elimination of benefits and even steeper wage cuts than an earlier proposal made by Chairman Robert S. "Steve" Miller.

Instead of the $10 to $12 an hour that Miller said Delphi should pay its production workers, the company started talks with the United Auto Workers last Friday by seeking wages as low as $9 an hour, according to a copy of the proposal posted on union Web sites.

In addition, Delphi wants workers to accept:

• Huge increases in out-of-pocket health care costs and the reduction or elimination of pension benefits.

• The loss of vision and dental benefits, tuition assistance and child care subsidies.

• Reduced vacation days, paid holidays and overtime.

• The elimination of cost-of-living raises and profit sharing.

The new terms would take effect Jan. 1, 2006, and run through Jan 1, 2012.

Word of the proposal appears to have heightened tensions between Delphi and its union work force. The low-ball offer has stirred talk of possible strikes in Delphi's U.S. factories, where the average wage is $26 an hour.

"There is no way the UAW is going to accept this," said Skip Dziedzic, president of UAW Local 1866 in Oak Creek, Wis. "If Mr. Miller is looking for a fight, I think he is going to find one."

Delphi has declined to comment on the contents of its Oct. 21 proposals to the UAW. But it acknowledged in the document posted that the cuts "are more significant than previously discussed."

"There is no alternative," the company said in the six-page proposal. "Unless Delphi can transform its U.S. operations, they will cease to exist, resulting in even greater hardship for employees, retirees and families."

The UAW represents 24,000 Delphi workers; the International Union of Electrical Workers has 8,500 members at Delphi.

UAW: 'Total lack of concern'

UAW President Ron Gettelfinger also declined to provide details, but said Friday that "Delphi's proposal displays a total lack of concern about the impact it would have on Delphi workers, their families, their communities and our nation."

Union members were stunned by Delphi's proposal to modify a health care plan that currently provides medical coverage nearly free of charge.

Delphi wants rank-and-file workers to accept "out-of-pocket" expenses of $2,500 a year for an individual and $5,000 for a family. Under the plan, workers would have to pay monthly premiums of up to $240 and deductibles of up to $1,800. Prescription drug costs would increase to $10 for generic and between $20 and $40 for name-brand drugs.

Those figures are far beyond what UAW officials recently agreed to with General Motors Corp. in their health-care deal announced last week. At GM, for example, UAW retirees are being asked to bear out-of-pocket expenses of $370 a year for an individual and $752 for a family.

Delphi's pension plan would be frozen and accept no new participants after Jan. 1, according to the proposal. Delphi also said it may terminate the pension plan.

In the weeks leading up to Delphi's Chapter 11 bankruptcy filing on Oct. 8, Miller repeatedly said the company had to pay its U.S. factory workers wages more comparable to those of its non-union competitors.

But with a court-imposed deadline of Dec. 16 to work out contracts with the UAW and the International Union of Electrical Workers, the sides seem far apart.

"It looks like (Miller) is trying to provoke a strike," said Gregg Shotwell, a worker at Delphi's plant in the western Michigan town of Coopersville. "Before it was $10 to $12 and people were like, whoa. Now it's $9 or $10."

Analyst says strike likely

One Wall Street analyst said Tuesday that a strike appears "very likely" based on the initial reaction by UAW members to Delphi's proposal.

"According to the local UAW president we spoke with, a strike is very likely at this juncture," said Bradley Rubin of the investment firm BNP Paribas. "He noted that the morale among his members is at an all-time low even before they received this proposal."

Under the schedule set by U.S. Bankruptcy Judge Robert Drain, Delphi and its unions have until Dec. 16 to agree on wage and benefit contracts. If the sides are at a stalemate, Miller has said he will ask the court to void its current pacts with the UAW and IUE.

If the contracts are tossed out by the court, the unions then have a right to strike Delphi.

A strike not only would cripple Delphi's U.S. operations, but also would immediately disrupt production at GM, Delphi's biggest customer.

"A prolonged Delphi strike would be devastating to GM," said Rubin. "Production would almost completely shut down because of the lack of essential parts from Delphi."

UAW spokesman Paul Krell could not be reached for comment Tuesday. A Delphi spokeswoman declined comment.

Strike is last resort

Local union leaders said the UAW would strike Delphi only as a last resort.

"The UAW always does its best not to get into a position to go on strike," said Dziedzic, whose local represents 484 workers. "We will do everything we can. But you can't bring an autoworker in America a $10-an-hour job. There is just no way."

In its Chapter 11 filing, Delphi cited uncompetitive labor costs as the principal reason for its bankruptcy. The Troy-based supplier, which was spun off from GM in 1999, lost $741 million in the first half of the year.

And while Miller has said Delphi needs huge wage reductions, he added that he understood the anger of rank-and-file workers.

"They pursued the American dream and globalization has swept over them," Miller said at an Oct. 12 news conference.

Cuts deeper than expected

But the drastic cuts proposed are even beyond what union members expected.

In addition to the wage and benefit cuts, Delphi also wants the freedom to outsource work, close plants and fire 4,000 laid off workers in the company's "jobs bank."

The proposal would allow Delphi to outsource certain jobs now performed by skilled trades workers.

It also would drastically reduce the number of UAW representatives on Delphi's payrolls. The company would allow one union representative for every 250 workers. Delphi also wants to restrict how much overtime union representatives can file. Joint programs between Delphi and the UAW also would be eliminated.

In addition, no strikes, work stoppages or slowdowns would be permitted during the term of the proposed contract.

Other programs that would be eliminated include the UAW Legal Services Plan, tuition assistance, company paid health club memberships and child care subsidies

In its proposal to the electricians union, Delphi said it wanted to reduce the union's employment from the current 8,500 workers to 3,000 -- and to cut their pay more than 60 percent, according to the union.

"These have to be jobs worth having," said Jim Clark, president of the electricians union. "These are not cushy jobs. These are labor-intensive jobs."

Clark said his members understand well that Delphi is playing them off against workers in lower-wage countries such as Mexico and China.

"In the global economy, workers are going to be exploited," he said. "And just because they're Americans doesn't mean a big corporation won't try to pay the least amount that people are willing to work for."

You can reach Bill Vlasic at (313) 222-2152 or bvlasic@detnews.com.