UAW offers counter bid to Delphi

WASHINGTON -- The United Auto Workers has made a formal counterproposal on wages and benefits in an effort to end its prolonged stalemate with bankrupt auto supplier Delphi Corp., The Detroit News has learned.

The roughly 10-page proposal, which offers some concessions, was presented to Delphi and its private equity partners late Monday.

Delphi, its key investors and other stakeholders met with UAW officials Tuesday in Detroit for about three hours to ask questions about the complicated proposal. The meeting was held at the UAW-DaimlerChrysler National Training Center downtown.

"It's a good-faith proposal that we are all taking a close look at," one person involved in the talks told The News.

An agreement between the UAW and Delphi is crucial to the success of Delphi's plan for private equity investors to buy up to 70 percent of the Troy-based auto supplier and bring it out of bankruptcy as a newly capitalized company.

The deal is in some jeopardy, as several deadlines have been missed.

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 LP, which is buying DaimlerChrysler AG's Chrysler Group in an agreement announced Monday -- is withdrawing from the deal, further delaying matters. It had agreed to invest up to $1.7 billion in Delphi and control three seats on the board.

The UAW's proposal is extremely complex, in part because it refers to appendixes and various aspects of the more than 100-page master agreement. "We're still trying to understand it," the person said.

Several groups have been formed to address questions about the proposal's exact terms. Another meeting on the proposal could be held as soon as Friday.

The Detroit News reported on May 1 that the UAW would make its counterproposal soon; the union repeatedly told Delphi in the past two weeks it needed more time.

Delphi spokeman Lindsey Williams declined to comment and the UAW didn't return calls.

Contrary to some analyst reports, Cerberus has no plans to continue as part of the equity deal, although the firm may invest in Delphi's exit financing, according to the parts maker.

Investors seek restructuring

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 -- will restructure their agreement with Delphi.

Also as part of its restructuring, Delphi wants to close 21 of 29 U.S. plants and must reach agreement with its former parent General Motors Corp. GM has said it expects its costs connected to resolving its issues with Delphi to be between $6 billion and $7.5 billion.

About 20,000 Delphi hourly workers already have agreed to accept buyouts or early retirements and thousands of salaried workers have also left the company.

The UAW proposal suggests that some of the Delphi plants targeted for closure could remain open in a discussion on "wind down" procedures.

UAW has been 'pragmatic'

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.

Harley Shaiken, a professor of labor relations at the University of California, said the UAW "has been very pragmatic."

"It has made some very painful choices. It wants to see a viable Delphi but its fear is some of the draconian cuts proposed would still not guarantee jobs or a strong company," Shaiken said, noting that some of the initial cuts "would have made their workers part of the working poor."

The UAW is worried about concessions they make to Delphi and the impact it could have on the upcoming contract talks with the Big Three. "The automakers will demand the same concessions," Shaiken said.

The union will begin negotiating a new master labor agreement this summer. The agreement expires in September, though the UAW's supplemental pact with Delphi continues until 2011.

Neither GM nor Delphi want the Delphi concession talks to drag on into summer.

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.

Cal Rapson, the UAW's chief GM negotiator, attended the meeting Tuesday; Gettelfinger did not.

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