CHICAGO – Bankrupt auto parts maker Delphi Corp. on Friday announced an expanded deal of buyouts with United Auto Workers and put off contentious court hearings, signaling a stepped-up effort to settle matters and avoid a costly strike.
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The plan, which requires bankruptcy court approval, gives UAW workers a buyout option and expands an earlier attrition plan to include less senior workers, reducing the impact from Delphi's scheme to cut wages, benefits and jobs while it restructures U.S. operations.
General Motors Corp. (GM), which spun Delphi off in 1999, said it will split the cost of the new buyouts with Delphi.
Delphi said court hearings into both its request to reject its labor contracts and thousands of parts contracts with GM have been adjourned until August 11 to allow Delphi, GM and the unions to focus on a settlement.
The postponement of the hearings for two months shows that there is still much to negotiate before reaching a complete settlement, analysts said.
"It looks to be a step in the right direction," Morningstar analyst John Novak said. "There's certainly more to go, whether you're talking about the parts contracts or what to do with the wages for the existing employees."
The broad restructuring plan calls for cutting about four-fifths of its 33,100 U.S. hourly workers, exiting 21 of 29 U.S. union plants and cutting hourly wages to as low as $12.50 from about $27 to make its U.S. operations competitive.
"It shows that everybody's at the table and they're committed to finding some sort of out-of-court solution," Novak said. "That's not surprising because no one is interested in a strike."
The UAW, and Delphi's second largest union, the International Union of Electrical Workers-Communications Workers of America had threatened to strike should Delphi throw out their contracts, which could cripple production quickly at Delphi and GM, still the parts maker's largest customer.
Analysts have said a strike at Delphi would force GM to burn through billions of dollars a week.
"Anything that swings the pendulum in favor of a strike not happening will get GM stock to react favorably," Argus Research analyst Kevin Tynan said.
Shares of GM were up 1.4 percent in after-hours trading on Inet from its closing price of $25.35 on the New York Stock Exchange.
GM, the world's largest automaker, also has agreed to provide financial support for the plans as they are extended to other unions and to consider other support, Delphi said.
"We are focused on reaching a consensual agreement with Delphi and its unions and these important steps today show progress," GM spokeswoman Gina Proia said.
The buyout offer mimics the plan offered to UAW workers at GM in March with lump-sum payments of $140,000 for workers with 10 years or more seniority and $70,000 to those with fewer than 10 years. Other employees could receive pro-rated offers.
It also expands the attrition plan from March, allowing UAW workers with 26 years service to proceed with a pre-retirement program, which previously applied to workers with 27 years or more of service, Delphi said.
Delphi, which filed for bankruptcy in New York last October, continues to negotiate with its other unions and has said it hopes to extend attrition offers to 4,500 workers from those unions, including the IUE-CWA.
Delphi on Monday had asked the court to adjourn the hearing into its labor contracts, citing progress in talks. That decision sparked hopes that the sides could announce an agreement on some issues possibly before or during a UAW national convention in Las Vegas next week.
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