Delphi, Ford, GM and the summer contract talks will probably be the last hurrah of the UAW
Delphi workers get choices
The incentives are considered necessary to persuade workers to ratify a deal that would significantly shrink the size of the Troy-based parts supplier in North America and reduce hourly wages to what the company considers competitive rates.
Advertisement A ratified agreement will move the former General Motors Corp. parts arm out of bankruptcy and free up the UAW's negotiating staff to tackle summer contract talks with the Detroit automakers. A deal also would avert a strike that could cripple GM, Delphi's largest customer and former parent, by leaving it short of parts.
The incentives for ratifying the deal vary in order to appeal to Delphi's many hourly constituencies, people familiar with the deal said.
The union accepted a two-tier wage system in 2003 that allows Delphi to offer significantly lower wages and benefits to new hires, creating an hourly workforce of workers with higher wages, permanent workers with lower wages and temporary workers.
The incentives include:
? A $105,000 buy-down -- paid in $35,000 installments over three years
-- for about 4,000 workers who now receive the same wages and benefits as GM employees. In exchange, those workers would see their hourly wages cut from about $28 to so-called supplemental rates of $14.50 to $18.50, beginning Oct. 1. During the buy-down period, those workers also can try to return to GM.
? A $140,000 buyout for workers with more than 10 years of service.
? A $70,000 buyout for workers with less than 10 years of service. Workers who take either buyout will have to leave the company by Sept. 15.
? A $35,000 payout to encourage workers with at least 30 years of service to retire.
? Retirement benefits for workers who are at least 50 years old and have at least 10 years of service.
? A so-called grow-in package for workers with 26 years of service as of Sept. 1. The package would allow those workers to stop working but be compensated as active workers -- at the new lower rates -- until they hit 30 years of service, and then retire.
? Severance pay of $1,500 per month for every month worked -- up to $40,000 -- for all supplemental and temporary employees who choose to leave the company.
Skilled trade workers wouldn't see a change in hourly wages.
All workers compensated at GM rates also would have their health benefits changed to include the same higher deductibles and co-pays offered to employees hired since the two-tier wage and benefit structure took effect.
Skilled trade workers would receive a $10,000 payment to supplement the increase in health-care costs.
Representatives from Delphi and GM declined to comment on the specifics of the deal. A UAW spokesman was unavailable Saturday.
Delphi, which GM spun off as an independent company in 1999, supplies everything from satellite radio receivers to heating and cooling systems. It is GM's largest supplier.
GM has said it expects to pay Delphi between $300 million and $400 million in annual labor-related charges on top of $7 billion in retirement and labor costs. But the Detroit automaker expects those costs to be offset by nearly $2 billion in annual savings once Delphi's costs are competitive.
The plan, which most Delphi workers will see for the first time at union local meetings Monday, would leave Delphi operating only four UAW plants: Grand Rapids; Kokomo, Ind.; Lockport, N.Y., and Rochester, N.Y. GM, or a third-party designated by GM, would operate Delphi's Flint East, Saginaw manufacturing and Needmore Road plants. Delphi plans to sell four plants -- Saginaw steering; Adrian; Sandusky, Ohio; and Cottondale, Ala. -- and close at least 10. It's unclear what will happen with the rest. Those closing include Coopersville; Columbus, Ohio; and Milwaukee.
The UAW, Delphi and GM are trying to get the deal ratified before a two-week summer shutdown that begins July 1. When the parties return from the shutdown, the UAW will begin formal contract negotiations with GM, Ford Motor Co. and Chrysler Group.
"Measured against the initial offer that Delphi made as it announced bankruptcy, this is a much softer landing for many Delphi workers -- softer but still painful," said Harley Shaiken, a labor professor at the University of California at Berkeley.