DETROIT (Reuters) - General Motors Corp. (GM.N) will likely financially help bankrupt auto parts supplier Delphi Corp. (DPHIQ.PK) in negotiations with its union, Delphi's chief executive officer said late on Monday.þþ``We are going to need some financial assistance from GM,'' Delphi Chief Executive Steve Miller said at the World Automotive News World Congress in Dearborn, Michigan.þþ``And Rick has signaled he is going to be a participant,'' Miller said, referring to GM's chief executive, Rick Wagoner.þþDelphi, which was spun off by GM in 1999, filed for bankruptcy protection in October. Miller has said the company must cut wages, benefits and jobs for hourly workers to reorganize its money-losing U.S. operations.þþMiller said on Monday the company was in talks with the United Auto Workers union and its former parent General Motors.þþ``Now that the three of us are together, and GM's giving financial assistance...the tone of discussions have improved dramatically,'' he said.þþDelphi had said earlier that failure to reach a deal with its union would force it to ask the court to reject current labor agreements. Such a motion could result in a strike at Delphi, which would likely shut down a few plants.þþThe closures could force GM, Delphi's biggest customer, to burn through millions of dollars in cash each week, analysts have said. A 1998 strike at Delphi essentially halted GM's North American operations for nearly two months. þþBUMPY ROADþþGM is also struggling financially as it grapples with high labor and commodities costs, a loss of U.S. market share to foreign rivals and stalled sales of sport-utility vehicles -- its longtime profit generators.þþThe world's largest automaker lost nearly $4 billion in the first three quarters of 2005.þþMiller said the two main reasons Delphi had to file for bankruptcy were the gap between its labor costs and those of its rivals, and the decline in GM's production.þþ``GM's volume dropped by about a million units a year,'' Miller said. ``That's about $2 billion off our revenue base every year.''þþMiller also said the ``cost problem'' was going to be challenging for the Big Three automakers -- GM, Ford Motor Co. (F.N) and Chrysler (DCXGn.DE) -- next year.þþ``They have their date with destiny in September 2007 when their labor contracts expire,'' he said. The automakers are expected to renegotiate tougher deals with the union as they try to bring down labor costs.þþReferring to Delphi's own labor costs in the United States, Miller said they are $3 billion higher than those of its competitors.þþMiller also said Delphi's pension plans for its hourly and salaried employees were underfunded by about $5 billion, according to ``Generally Accepted Accounting Principles.'' He said the Pension Benefit Guaranty Corporation would estimate the plans to be underfunded by about $10 billion.þþSpeaking about healthcare, Miller said he is not calling for a national program funded by the government right now, but said that the current system poses a ``massive'' problem.þþ``We have to ask ourselves if there is some answer better than the one we've got.''þþLooking ahead, Miller said he hopes for the best. ``If we do this right, Delphi will remain one of the world's premier auto parts suppliers. If we do it badly, we may be broken up into small pieces...and the impact of a collapse could seriously injure many of the world's automakers.''þþ
Source: NY Times
