UAW Workers Ratify Delphi Labor Agreement - Union

Workers represented by the United Auto Workers union at Delphi Corp. (DPHIQ) ratified a new labor agreement with the auto supplier, clearing a hurdle in the company's effort to exit Chapter 11.

The union said Friday that members approved the measure by a 68% to 32% vote. About 17,000 Delphi workers at 18 sites were eligible to vote on the deal.

Delphi is the former parts-making division of General Motors Corp. (GM) and has been in Chapter 11 since October 2005. The labor deal, in addition to aiding Delphi's efforts to come out of bankruptcy protection, is also significant for GM, which relies on Delphi for many parts and systems used in its cars.

Delphi now needs to finalize a capital investment plan that would shape its emergence from Chapter 11. Delphi also needs to finalize agreements with other unions that represent about 3,000 workers.

Before reaching a tentative agreement last week, the company and its unions had clashed over new labor terms. The UAW said in its statement Friday that 65.3% of production workers approved the deal while 79% of the skilled trades workers voted in favor.

The agreement calls for Delphi to offer wages of $14.50 to $16.23 an hour for all current workers. New hires would make $14 an hour. The agreement also calls for four UAW-represented plants to remain open. The rest will be sold, closed or taken over by GM.

Workers who began their employment with GM or who were hired before the lower- tier wage for new hires went into effect earned about $27 an hour.

About 4,000 of the 17,000 remaining Delphi UAW workers were making the higher wage. Delphi offered buyouts, early retirements and "flow backs" to jobs at GM last year.

Under the new agreement, Delphi will offer lump-sum payments, relocation allowances, buyouts and early-retirement packages to soften the blow for workers.

In addition, GM agreed to take control of some Delphi plants and open the door for certain Delphi employees to "flow back" to the auto maker.

GM also will incur expenses related to supplementing the paychecks for current Delphi workers in order to bridge the gap between what the auto supplier was willing to fork out and what the UAW was willing to accept. GM has said its financial exposure to Delphi will be $7 billion.

The UAW and Delphi still must negotiate so-called competitive operating agreements at the plant level, according to the contract. Those agreements cover issues such as work rules, job classifications and outsourcing, but not wages and benefits.

GM shares, which hit their highest level in more than two years on Thursday, were down 0.4% at $38.01 in recent trading. The stock has benefited from optimism about the Delphi deal and hopes about the prospects for GM's upcoming contract talks with the UAW.
Source : http://money.cnn.com/