The United Auto Workers union rejected wage concessions proposed by Delphi Corp. and a group of private equity firms, jeopardizing a $3.4 billion investment aimed at pulling the auto-parts maker out of bankruptcy.
``It was a pathetic offer,'' UAW Vice President Cal Rapson said of the 29-page offer from the company and six investors led by Cerberus Capital Management LP.
The offer came at a March 21 meeting between the company and the union at a General Motors Corp. office in Pontiac, Michigan. GM officials and Cerberus senior executive David Thursfield also attended. The UAW turned down the plan March 26.
``Negotiations are not, `My way or the highway,''' Rapson said in an interview today. ``They say David Thursfield is a take-no-prisoners guy? He could be a casualty.''
If the investors walk away, Delphi may ask a U.S. bankruptcy judge to scrap the UAW contract. The union threatens to strike if the contract is voided, potentially cutting off parts to GM, Delphi's biggest customer.
``It sounds like talks have broken down and negotiations are becoming more tense,'' Morningstar Inc. analyst John Novak said in an interview. ``We'll probably see more of this type of brinksmanship before a resolution is reached.''
Delphi was spun off by GM in 1999 and filed for bankruptcy protection in 2005. GM ``has got every bit of responsibility to help us get out of it,'' Rapson said.
Wage Issue
Thursfield, a former Ford Motor Co. executive, began talks with the UAW about Delphi concessions on Jan. 8. Rapson wouldn't disclose details of the offer today. An offer made public last year would have cut wages to $16 an hour from about $28.
``We continue to engage in negotiations with the UAW,'' Delphi spokesman Lindsey Williams said. ``These negotiations include the Plan Investors and the union leadership. We have not previously bargained in the media and we don't intend to start now. We continue to work toward reaching a resolution.''
GM spokeswoman Renee Rashid-Merem and Cerberus spokesman Peter Duda declined to comment.
``Shutting down GM, amid their nascent turnaround and in the face of possible slowdown in the economy could cause serious damage in the short-run and wouldn't do much in the long-run either,'' Novak said.
Joining New York-based Cerberus in the Delphi investment are Appaloosa Management LP, based in Chatham, New Jersey; UBS Securities LLC, based in Stamford, Connecticut; and Harbinger Capital Partners Master Fund I Ltd., Merrill Lynch & Co., and Goldman Sachs Group Inc., all based in New York. The group would have a 30 percent to 70 percent stake in the reorganized Delphi.
Automotive News, a trade publication, first reported the union's rejection today.
Health Care
After a UAW convention today, President Ron Gettelfinger said the union would resist further health-care concessions in this year's bargaining with U.S. automakers.
``We addressed health care in '05,'' Gettelfinger told reporters after the meeting in Detroit. ``You don't get two bites of the apple.''
The UAW agreed to health-care cuts with GM and Ford in 2005. At Ford, only 51 percent of UAW members ratified the accord. The union declined to make the same cuts last year at DaimlerChrysler AG's Chrysler unit.
Gettelfinger told reporters at the convention's opening yesterday that the UAW had studied the issue again recently when it reviewed Chrysler's finances amid talk of a sale.
Union a Factor
Dieter Zetsche, DaimlerChrysler's chief executive officer, told reporters in Geneva this month that the union's refusal to grant health-care cost reductions was a factor in the company's decision to possibly divest its U.S. division.
``I never heard that until now,'' Gettelfinger said yesterday, referring to Zetsche's remarks. He declined today to comment further about Auburn Hills, Michigan-based Chrysler. The union leader is a member of DaimlerChrysler's supervisory board.
Shares of Detroit-based GM fell 94 cents to $31.24 at 4:23 p.m. in New York Stock Exchange composite trading. Shares of Dearborn, Michigan-based Ford rose 13 cents to $7.98. U.S. shares of Stuttgart, Germany DaimlerChrysler fell $1.68 to $80.99.
source:www.bloomberg.com
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