GM-Delphi-UAW Near Deal, News Reports Claim
By Michelle Krebs June 14, 2007General Motors and bankrupt auto parts maker Delphi Corp. reportedly are near a deal with the United Auto Workers (UAW) union that would provide a cash payout to Delphi workers in exchange for lower hourly wages, according to news reports this morning.
The Detroit News reports the Delphi deal involves offering 4,000 UAW workers a cash payment in return for accepting lower wages that could range from $14 to $18 per hour. Workers could also take the lump sum and accept early retirement or return to GM. GM would fund the program, which could be a done deal in the next week or so, allowing Delphi to emerge from bankruptcy. Delphi filed for bankruptcy in October 2005.
The Delphi dilemma has been a dark cloud of uncertainty hanging over GMâs head -â and the heads of suppliers and customers of Delphi. A deal would provide everyone associated with Delphi relief.
It also sets the stage for this summerâs UAW negotiations with Chrysler, Ford and GM. The Big Three are seeking deep and unprecedented concessions from union workers in pension, health care and labor costs to make them competitive. The Big Three claim they are at a $30-an-hour labor-cost disadvantage against Toyota and Honda.
All three domestic automakers "will move investment in plants and people outside the country" if the UAW doesnât agree to bringing U.S. labor costs in line with those of foreign automakers, an unnamed auto company executive told the Wall Street Journal in an article today.
Meantime, back at Delphi, private equity firm, Highland Capital Management LP, said in filings with the Securities and Exchange Commission Wednesday that it had entered talks with GM and Delphi to become the lead investor in the deal to bring Delphi out of bankruptcy.
A number of players has come and gone in the Delphi rescue. Cerberus Capital Management, the big private equity firm that is buying Chrysler, is expected to back out of a group that would take control of Delphi with an infusion of up to $3.4 billion, the Wall Street Journal reports. Appaloosa Management, Delphi's largest shareholder, and Harbinger Capital Partners are part of that $3.4 billion plan.
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