Friday, November 4, 2005

GM preps for strike at Delphi

Automaker shifts into high gear to stockpile vehicles in case ailing supplier is shut down.

By Brett Clanton / The Detroit News

Deal for Delphi? Do you think Delphi will reach an agreement with its unions by mid-December, when the bankrupt auto supplier said it will ask the court to reject its labor contracts if no deal is in place? Yes No, there will be a strike Get results and comments Error processing SSI file Comment on this story Send this story to a friend Get Home Delivery

DETROIT -- General Motors Corp. is ramping up production even as its sales fall sharply, a move that could help the automaker stockpile enough cars and trucks to weather a possible strike by union workers at Delphi Corp.

According to Delphi workers and officials with other suppliers, GM has boosted orders for parts, forcing some parts plants to run on overtime to keep pace.

At the same time, GM is operating several assembly plants on overtime after increasing vehicle production 8 percent in October despite a 26 percent sales dip.

The moves come as United Auto Workers President Ron Gettelfinger told union leaders this week in Detroit that Delphi's demand for huge wage and benefit cuts are a "road map to conflict," according to a letter distributed Thursday to union workers.

Delphi, GM's largest U.S. supplier, has indicated it will ask the bankruptcy court to void its union labor contracts if the sides don't reach an agreement by Dec. 16. If that happens, the UAW is free to call a strike that could cripple Delphi and severely hinder production at GM and other automakers.

GM acknowledged Thursday it is preparing for a strike. "We are looking at contingency plans and ways to protect our supply," said GM spokesman Stefan Weinmann, declining to elaborate.

"Clearly, our priority is to see that everything continues as normal," he said.

In recent weeks, GM has boosted orders for parts from Delphi and other suppliers, which could allow the automaker to keep building vehicles if Delphi's 33,000 U.S. hourly workers walk off the job.

One vice president for a GM supplier who asked that his name not be published said, "the volumes are way up. They are higher than we have ever seen them. With the way sales have been, you know something is going on here."

Plant workers at Delphi's Kokomo, Ind., facilities said parts for GM vehicles are being stockpiled -- a stark contrast from the days' or hours' worth of parts that suppliers typically keep on site to avoid the cost of storing them.

"I've been told we have a month or a month-and-a-half supply ready to go," said Brian Stoner, a production worker for Delphi in Kokomo. "We're seeing some of the more critical parts go through at a heavier pace."

Jim Peters, a UAW committee man for Delphi in Kokomo, said bigger orders started pouring in the week after Delphi filed for bankruptcy on Oct. 8. "We usually don't have that much overtime, and then, bam! All the sudden we have a few weeks in a row," Peters said. "This time of year, orders are never up."

Workers at Delphi plants in Saginaw, Coopersville, Indianapolis and Dayton, Ohio, also said orders have increased in recent weeks.

"I don't know what they're doing, but I know we're going into work on Saturday," said Dave Scherer, a Delphi production worker in Dayton.

Shelly Lombard, an industry analyst with Gimme Credit Publications in New York, said the increased production could be a sign that GM is refilling its pipeline after a summer of incentive-fueled sales. But it may also mean GM is protecting itself from potential troubles at Delphi.

"It makes all the sense in the world," she said. "The last thing they need right now is a supply disruption."

GM lost more than $4 billion in North America in the first nine months of the year and is counting on vehicles such as a lineup of redesigned SUVs to lead a rebound.

In order to make sure those vehicles launch smoothly, it will need a supply chain that is healthy and fully intact.

A strike at Delphi, the former GM parts division that makes everything from steering components to satellite radios, could cripple GM overnight. A 1998 strike at just two Delphi plants virtually shut down GM and cost the automaker billions.

GM is running seven plants on overtime, according to Wards Automotive. The automaker says the overtime is not out of the ordinary.

Several of the plants are working extra hours to launch vehicles, and some full-size truck plants also are operating on overtime to meet demand, Weinmann said.

Sales of the full-size Chevrolet Silverado and GMC Sierra were down 39 percent and 43 percent respectively in October.

Basil "Buzz" Hargrove, president of the Canadian Auto Workers union, said he has seen no evidence of stockpiling at GM assembly plants in Canada.

"We've looked at the sales numbers and the market," Hargrove said. "The production is pretty consistent with what happens historically when the numbers are there."

But GM this week announced new work for two of its factories. It will add a third production shift at its Wilmington, Del., factory to support demand for the Pontiac Solstice roadster and two more upcoming convertibles. GM said Thursday it will invest $20 million for a third shift at a Shreveport, La., plant that builds the Hummer H3 sport utility vehicle.

Marty Thompson, 49, a production worker at GM's Hamtramck large sedan plant, said his plant can barely keep pace with demand in recent months. "We can't build these cars fast enough."

Even with extra parts and vehicles on hand, a prolonged strike at Delphi could bring GM to its knees.

Delphi has enraged UAW members by demanding wage cuts from its hourly workers to as low as $9 per hour, down from $27 per hour today. As part of an Oct. 21 cost-cutting proposal, Delphi also asked workers to shoulder a greater portion of their health care costs.

"This conflict is not about globalization but about dictatorship versus democracy," the UAW's Gettelfinger told union leaders Wednesday, according to a letter sent to Delphi workers in Coopersville that was signed by UAW Local 2151 President Robert Betts.

Though Gettelfinger has not advocated a strike, he called a "work to rule" effort, in which workers do the bare minimum of labor required of them, a "good idea," according to the letter.

"We should not do one thing more than what is required," Gettelfinger said, according to the letter.

UAW leaders are continuing to negotiate with Delphi.

"We have a plan. We are not going to show our hand until the time is right," Gettelfinger said, according to the union letter. But local union officials said this week they are increasingly doubtful that a compromise will be reached by the December deadline.

Some UAW officials at Delphi plants have told workers to prepare for a strike.

Yet the CAW's Hargrove said he doesn't believe the UAW is prepared to call a strike at a time when so many jobs are at risk, despite some Wall Street predictions that a strike is more likely than not. "From where I sit," he said, "I don't see that as a possibility at all."

You can reach Brett Clanton at (313) 222-2612 or bclanton@detnews.com.