Delphi may get UAW counteroffer

Union's proposal to end stalemate over wages, benefits at auto supplier could come this week.

David Shepardson / Detroit News Washington Bureau

WASHINGTON -- The United Auto Workers union is expected to present a comprehensive counterproposal as early as this week that could end its prolonged stalemate with Delphi Corp. over wages and benefits, according to three people familiar with the discussions.

An agreement between the UAW and Delphi is crucial to a plan by private equity investors to purchase the Troy-based auto supplier and bring it out of bankruptcy as a newly capitalized company.

The deal is currently in jeopardy. The UAW turned down at least two offers from Delphi that would have meant deep pay cuts for members. And a key investor, Cerberus Capital Management is withdrawing from the deal, further delaying matters. It had agreed to invest up to $1.7 billion in Delphi.

If the UAW puts a proposal on the table -- as people at Delphi and the private equity investors expect -- it could jump-start the process.

Two people involved in the talks said they were confident that the UAW would make its comprehensive proposal this week, and that they expected it would be delivered at a meeting later this week, though it hadn't been scheduled.

One person involved cautioned that the UAW had been set to make its proposal last week, but asked for more time. None of the people involved knew what kind of concessions -- if any -- the UAW would make in its counterproposal.

UAW spokesman Roger Kerson and Delphi spokeswoman Claudia Piccinin declined to comment.

In January, a judge approved a plan by private-equity investors to invest $3.4 billion in a court-approved agreement to own up to 72 percent of Delphi and control a majority of seats on the board.

Since Cerberus is backing out, the remaining investors who agreed to buy Delphi -- Appaloosa Management LP, Harbinger Capital Partners, Merrill Lynch & Co., UBS Securities LLC and Goldman Sachs -- are expected to continue under amended framework agreements.

Cerberus hasn't formally submitted paperwork to withdraw, though a company official reiterated its plans to do so Monday. Cerberus may participate in debt financing and is also expected to continue a role in negotiations between the UAW and Delphi.

Delphi also wants to close 21 of 29 U.S. plants and it must also reach agreement with its former parent General Motors Corp., which has said it expects its costs connected to resolving its issues with Delphi to be between $6 billion and $7.5 billion. Just more than 20,000 Delphi hourly workers agreed to accept buyouts or early retirements and thousands of salaried workers have also left the company.

Publicly, the UAW has given no ground with Delphi, as the union's president Ron Gettelfinger has repeatedly excoriated the "greed" of company officials.

Delphi originally offered just $10 to $12 an hour to its union workers, which would have been a pay cut of more than 60 percent.

One person close to the talks suggested that mid-May was a real deadline for completing a deal -- after several earlier deadlines had passed. Neither GM nor Delphi want the talks to drag on into summer -- when the UAW will begin negotiating a new master labor agreement with Detroit's automakers and possibly Delphi. The agreement expires in September.

Delphi and its equity partners made a first proposal to the UAW around March 10, and then offered a more detailed and more generous 29-page proposal on March 21. The UAW called both proposals "far short of anything we can take to our membership."

The second proposal included "escalation clauses" that would raise wages every six months if certain benchmarks are met, but it's not clear what wage was offered or how much the concessions would cost UAW members, The News reported on March 29. A key hurdle in the talks is the supplemental agreement between Delphi and the UAW in 2003 that allowed the company to hire new workers at lower wages. In doing so, the UAW agreed to a major concession and is not eager to give more ground.

Also, Delphi Corp. said Monday it lost $63 million in March, upping its year-to-date losses to $381 million. In 2006, Delphi lost $5.1 billion, including a $2.9 billion restructuring charge.

You can reach David Shepardson at (202) 662-8735 or dshepardson@detnews.com.