Auto industry braces for Delphi strike threat

DETROIT — About 24,000 Delphi factory workers are on the verge of voting for a massive strike which could send ripple effects across North American auto-related sectors.

The United Auto Workers approved yesterday a call for a strike just a week before the autoparts maker, which is in Chapter 11, appears before a judge to ask permission to void its current labor agreements.

GM says it’s confident it can keep Delphi workers from striking

According to business media, the company wants the U.S. Bankruptcy Court to approve massive wage and benefit cuts, as well as early retirement packages, to employees. Delphi has reportedly offered UAW members $50,000 payments in exchange for 35 percent in wage reductions. In some cases, wages would drop overnight from $28/h to $17/h

Another 8,500 Delphi hourly workers represented by the International Union of Electrical Workers-Communications Workers of America have already taken strike authorization votes.

In April, the union insisted it would be “impossible to avoid a long strike” if the court backed Delphi’s plans.

A strike could cripple Delphi’s largest customer and former parent, General Motors, and may likely impact the other major North American carmakers and their suppliers, auto industry experts predict.

Even though GM has said it’s stockpiling parts in preparation for a strike, a long work stoppage by its largest supplier would seriously damage the vehicle manufacturers’ own restructuring efforts and lead to continent-wide closures relatively quickly.

A strike by the auto industry’s largest supplier would
having reaching impacts across all related sectors

Despite the union’s strike rhetoric over the last month, Robert Lutz, vice-chairman of global product development at GM told news media this week that he “absolutely refuses to believe that there’s going to be a strike,” adding that the three parties can still work towards a solution.

A Delphi strike in 1998 halted about 95 percent of GM’s North American operations for nearly two months. As a result, production was canceled on 318,000 cars and trucks and profit was cut by $1.3 billion. A year later GM spun off Delphi, which at the time was the carmaker’s parts division.

Automotive expert Dennis DesRosiers said recently that GM’s decision to spin off Delphi seven years ago is coming back to haunt the company. “If (a strike is called) there’s no easy way to solve it, so it will likely be a long and difficult one that will bleed GM,” he said.

Even though other vehicle makers like DaimlerChrysler — and even Japanese companies like Toyota — are far less dependant on Delphi than GM is, the aftershocks of a strike could still reach those players and their suppliers as they would struggle to compete with bankruptcy-protected GM and Delphi says DesRosiers.

Read more on this issue in the current may issue of Today’s Trucking.

— with files from Reuters