Buffalo News (New York), May 9, 2006, Tuesday

Copyright 2006 Buffalo News
Buffalo News (New York)

Distributed by Knight/Ridder Tribune News Service

May 9, 2006 Tuesday

SECTION: BUSINESS AND FINANCIAL NEWS

HEADLINE: Delphi gets its day in court today

BYLINE: The Buffalo News, N.Y.

BODY:
May 9--Delphi Corp. goes to Bankruptcy Court in New York today to try to free itself from its labor agreements, amid signs that its unionized workers are ready to strike if the troubled auto parts maker gets its way. Auto industry analysts said a work stoppage would likely cripple both Delphi and General Motors Corp., which means a huge responsibility sits on the shoulders of Bankruptcy Court Judge Robert D. Drain.
While Drain is not expected to issue a ruling for several weeks, his eventual decision could mean that the United Auto Workers would walk out of Delphi's plants, thereby starving GM of the parts it needs.
In turn, GM would have to shut down its plants, lay off its workers and start burning through its cash to maintain bare-bones operations -- a scenario that could throw the struggling automaker into bankruptcy.
"This thing is like a whirlpool: it just spins faster and faster," said James P. Womack, who heads the Lean Enterprise Institute, which promotes efficiency in the auto industry and other businesses. "There's no way to predict what might happen."
Instead of canceling the contracts or allowing Delphi to do so, Drain could force the parties including GM, Delphi's former parent back to the bargaining table. And some analysts think that's the more likely outcome of the court proceedings.
"It's hard for me to believe that the bankruptcy court is just going to throw out the contracts and bring both Delphi and GM to their knees," said Erich Merkle, director of forecasting for IRN Inc., a Grand Rapids, Mich., auto consulting firm.
Employees at Delphi's Lockport plant -- which employs 3,800 and auto industry analysts agreed that workers are likely to walk if Drain rules against the union.
"You pretty well have to go on strike," said Sam Turco, who has worked at Delphi's Upper Mountain Road factory for 33 years. "We can't trust management. They tell you things are going to turn around, but the news keeps getting worse."
The United Auto Workers has scheduled a strike-authorization vote for Thursday for its members at the Lockport plant. The union hopes the vote will demonstrate unity by the membership, said Frank Andrews, president of UAW Local 686.
"I would hope we see a 100 percent yes vote," Andrews said.
Andrews estimated that about 2,600 local UAW members are eligible to cast ballots in the strike-authorization vote. The numbers have fallen through attrition and as workers accept incentives to leave the company.
Delphi and the UAW have been trying to negotiate an agreement on reduced wages. But the fact that both sides have been gearing up for the court hearings would indicate that negotiations didn't make much progress, said Patrick Heraty, professor of business administration at Hilbert College.
Arthur Wheaton of Cornell University's School of Industrial and Labor Relations in Buffalo agreed. "I'm less confident they will be able to avoid a strike now," he said. That attitude stems in part from what appears to be a bit of tit-for-tat gamesmanship by both labor and management as the Bankruptcy Court hearings approached.
Early last week, Delphi which previously had asked the court for authority to abandon its union contracts went one step further, asking the judge to cancel the pacts if he doesn't think he can give the company the power to do that.
And two days later, the United Auto Workers asked its locals for a strike-authorization vote, which would give the union's top leaders the power to call a work stoppage.
"The company bosses are flexing their muscles, and now we're flexing ours," said Ron Bernard, 49, of Lockport, who has worked at Delphi for 30 years.
Nevertheless, Delphi spokesman Lindsey Williams argued that the company does not want confrontation.
"The UAW's recent decision to obtain strike authorization from its local units does not impact Delphi's commitment to obtain a consensual agreement," Williams said.
At the Bankruptcy Court hearing, Delphi will argue that if the union contracts remain in place, it expects to lose $2 billion this year and upwards of $10 billion through 2010.
"Under these projections, Delphi will simply not be able to continue to operate unless it can achieve significant modifications in its business," the company said in a court filing.
Meanwhile, the UAW will contend that those loss estimates don't even include the savings Delphi will realize through a buyout program it recently negotiated with the union.
In court papers, the union accused the company of "a bold attempt to enlist the Bankruptcy Court in Delphi's confrontational drive to eliminate nearly three-quarters of its UAW-represented hourly work force, extract deep concessions from the rest and turn Delphi into a low-cost, foreign-based producer of auto parts by force."
The outcome of the hearing and the ongoing talks will have significant implications for the Buffalo Niagara economy.
The local Delphi plant won a reprieve in late March, when the company revealed that the Lockport facility was one of only eight in the United States it wants to keep open. Delphi intends to close or sell the other 21.
Local workers remain worried about their pay and benefits, given that Delphi is calling for cuts that would reduce hourly wages from $27 an hour to $16.50 by next year.
"Delphi had made a lot of money from the sweat off our backs," Turco said. "Now they're investing the money by opening plants in Mexico and other countries and destroying our livelihood."
Other area manufacturing plants also would feel the ripple effect of a labor disruption at Delphi. GM's Town of Tonawanda engine plant has 2,500 workers. The region is also home to other manufacturers that supply GM or Delphi, such as Curtis Screw and American Axle and Manufacturing.
In a flier to its members, the UAW local urged them to authorize a strike, saying "a big turnout and a big 'yes' vote signifies a united membership. It's time to send that message."
Some workers at the plant agreed.
"I need this job," said Lisa Scott, a divorced mother of two teenage children who lives in North Tonawanda, "but I'll walk out with my union brothers and sisters if it comes to that."
Other Delphi employees, such as Bob Solomon, said Delphi's plight is forcing them to make big changes in their lives. After less than six years as a Delphi electrician, Solomon said he plans to leave the company and start his own business.
"Everyone is worried about a strike," he said. "You just knew it was coming."
By Jerry Zremski, Matt Glynn and Bill Michelmore
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