UAW: Delphi to Ask Judge to Cancel Contracts

DETROIT – Auto supplier Delphi Corp. is expected to ask a federal judge to cancel its union contracts Friday, an action that could lead to a devastating strike, the United Auto Workers said.

Delphi had set a deadline of Thursday to reach an agreement with its unions and General Motors Corp. (GM) that would lower wages for its 34,000 U.S. hourly workers, but it appeared unlikely Delphi would meet that goal. In a message on its Web site Thursday, UAW said Delphi would file motions to void its contracts on Friday morning.

A message was left seeking comment from Delphi.

The UAW, which represents the majority of Delphi's hourly workers, reacted angrily this week to Delphi's latest proposal, which calls for lowering workers' wages from $27 an hour to $16.50 an hour in 2007. Local union leaders have said the UAW won't take the deal to its members for a required vote.

GM also hadn't settled with Delphi as of Thursday morning. Delphi would depend on GM, its former parent and largest customer, to supplement its wage offer and give one-time, $50,000 payouts to union members if the offer is accepted. If GM doesn't agree to supplement workers' pay, wages would fall to $12.50 an hour for production workers and $21.50 an hour for skilled trades, the UAW said.

If Delphi asks the bankruptcy court judge to void its contracts, the company wouldn't immediately face organized strikes. Judge Robert Drain has scheduled a May 8 hearing on Delphi's request and wouldn't decide whether to void Delphi's contracts until after that hearing.

But if Drain does agree to void Delphi's contracts, the International Union of Electronics Workers-Communications Workers of America — which represents around 8,000 hourly workers — has already authorized a strike, and UAW members could authorize one as well.

A strike would be devastating for GM, which depends heavily on Delphi parts. GM, which is struggling with declining U.S. market share and spiraling costs, lost $10.6 billion in 2005.

The world's largest automaker has been shedding assets in a bid for cash. On Thursday, GM confirmed it is in talks to sell its 7.9 percent stake in Isuzu Motors Ltd. Earlier this month GM sold its 17 percent stake in Suzuki Motor Corp. for about $2 billion.

GM also is trying to sell a 51 percent stake in its finance arm, General Motors Acceptance Corp., a deal which could be worth up to $15 billion. The Wall Street Journal, citing people familiar with the matter that it did not name, reported Thursday that GM was getting closer to a sale.

A message seeking comment was left for a GM spokeswoman.

GM shares fell 22 cents to $21.93 in early trading on the New York Stock Exchange.