Canadian Union Chief Calls Delphi’s Request for Concessions "Impossible"

The head of the Canadian Auto Workers says Delphi’s request for union concessions is off base.
According to a report by Dow Jones, union president Buzz Hargrove told financial analysts that no union would agree to the concessions on wages or benefits being asked for by Delphi, the world’s second largest auto parts manufacturer.
Delphi has recently been under severe pressure to avert bankruptcy due to legacy costs and declining production of its number one customer, General Motors.
A Delphi spokeswoman declined to comment on Hargrove’s remarks, saying that the company continues to negotiate with the unions in private. Delphi is also seeking financial support from former parent General Motors Corp., which may be responsible for certain pension and benefit costs under agreements related to the 1999 spinoff.
The Canadian Auto Workers union’s contracts with GM, Ford Motor Co. and DaimlerChrysler AG expire on Sept. 20; if no agreement is reached, the union has voted to authorize a strike.
Though GM’s contract with the much larger United Auto Workers union doesn’t expire for another two years, the auto giant has recently met with union leadership behind closed doors.
Giant auto parts supplier Delphi is leaning heavily on the UAW for concessions as the company trembles under the weight of production cuts at GM, still its largest customer. If those concessions aren’t met, Delphi may be forced into bankruptcy in the next few weeks, the company has said.
Delphi chief executive and well-known Detroit restructuring expert Robert ” Steve” Miller is trying for up to $2.5 billion U.S. in labour cost cuts, which could come in the form of layoffs, plant closures or benefit cuts. Delphi says its all-in wage and benefit cost per U.S. hourly worker is $130,000 U.S. per year.
“Miller has put an impossible task in front of the UAW,” said Hargrove. “I don’t see big wage cuts in the cards. I don’t know that it can get done through collective bargaining,” he added.
If a major change isn’t made in Delphi’s cost structure, Hargrove added, the supplier will probably file for bankruptcy before a change in federal bankruptcy law goes into effect on Oct. 17.
As the president of an unaffiliated union – the CAW split from the UAW in the mid-80s – Hargrove isn’t privy to any non-public information regarding the ongoing Delphi-UAW talks, he noted.
As for the ongoing talks between the CAW and the auto makers, Hargrove said that “concessions in Canada (are) not going to help GM and Ford.” Because of Canada’s nationalized healthcare system and its younger workforce, he said, worker benefit and healthcare costs add up to about $120 per vehicle. For U.S. workers, that figure is around $1,000 per DaimlerChrysler and Ford vehicle and $ 1,500 per GM vehicle.