Tense
negotiations continue between the United
Autoworkers Union (UAW) and parts maker
Delphi, as the latter tries to emerge from
bankruptcy. Reports are that the UAW is
finalizing a revised offer to Delphi that
includes some minor concessions, but many
think the proposal will not be enough to
get a deal done.
Last
year, Supply Chain Digest observed that
the situation between the UAW and Delphi,
whose hand is strengthened in union negotiations
as it remains under the control of the bankruptcy
court, was a microcosm of the overall U.S.
labor situation. The lofty wages of U.S.
autoworkers and some other unionized industries
may be a thing of the past, as the realities
of a global economy and competition for
manufacturing work in low cost countries
effects even strongly unionized industries.
(See: Delphi,
the UAW and the Impact on Supply Chain Management
for Everyone)
For
example, the UAW has already agreed to a
two-tiered wage system at Delphi,
with new hires starting at just $14 per
hour, with a so called “all-in”
cost of about $25 per hour, including benefits.
This all-in cost would grow to about $42
an hour by 2011. That compares to previous
agreements where the hourly wage was $25
and total costs were over $70 an hour.
It
is possible that Delphi
will ask the bankruptcy court to allow it
to cancel the current union contract. While
that looked likely at earlier points, the
fact that the existing contract expires
in September may make that specific option
moot. At least one private equity company
considering buying Delphi and taking it
out of bankruptcy is insisting the UAW make
even greater concessions than the two-tiered
agreement already in place.
It
is believed the UAW proposal will make a
few concessions, but not to the level sought
by some within Delphi
and the potential private equity investors.
Meanwhile,
it is still possible that GM could be asked
to shoulder some of the burden to help avoid
a strike at its largest part supplier. GM
spun off the then company-owned parts business
a number of years ago, but which is contractually
on the hook for some of its labor costs,
and is by far Delphi’s largest customer.
With its own operations ailing, GM needs
a strike or added costs like a hole in the
head. GM has its own contract negotiations
with the UAW this summer.
The
Wall Street Journal quotes an unnamed UAW
official as saying, “This will be
a non-negotiable last offer. If Delphi
can’t live with it, then they should
go ahead and file their motion to void our
contracts and let’s go from there.”
It’s
going to get ugly, we predict. |