NEW YORK (AP) -- Lawyers for Delphi Corp.'s unions and stakeholders tried to convince a bankruptcy judge Wednesday that letting the faltering auto parts company jettison its labor contracts would unfairly sideline them and risk a potentially ruinous strike.þþBut a Delphi executive countered that the power to cancel contracts -- even if it triggers a walkout in coming months -- is better than prolonging a staredown with unions that could further weaken its chances of survival.þþLeaving contracts in place and pushing out a strike until late 2007 would be ''far more devastating to Delphi than a strike this summer,'' said the executive, Kevin Butler. ''If it is not clear that we are financially viable, then we are at risk with customer behavior.''þþThe testimony highlighted the second day of a closely watched trial in U.S. Bankruptcy Court for the Southern District of New York that could shape the future for the parts supplier, its 33,000 hourly workers and 18,000 retirees and General Motors Corp., its former owner and biggest customer.þþThe trial is scheduled to continue Friday and then resume in late May. Bankruptcy Judge Robert Drain is not expected to rule for weeks.þþDelphi is seeking the right to cancel its contracts with the United Auto Workers and other unions, saying that is a crucial step in its efforts to cut its costs and ensure its survival.þþBut the UAW, by far Delphi's largest union, says letting the company do so would give it an overwhelming and unfair advantage, allowing it to force through deep wage cuts and rob its workers of long-promised benefits.þþAt the same time it is asking hourly workers to sacrifice, Delphi is preparing to award its executives and managers with bonuses, union attorneys noted in questioning.þþDelphi's Butler testified Wednesday that after the company proposed sharp wage cuts last fall, it waited in vain for the UAW and other unions to make counterproposals that could advance negotiations.þþBut attorneys for smaller unions sought to point out that it was Delphi that had done little to advance talks, and ignored them to focus on the UAW.þþOther opponents of Delphi's proposal on Wednesday tried to show the judge that canceling the contracts would also harm their interests, while protecting that of GM, the world's biggest automaker.þþThe assertions, including one by an attorney for investment firms that hold 20 percent of Delphi's stock, were that Delphi might risk substantially more by canceling its contracts now than by living under them until they expire next year.þþIt would cost Delphi $300 million to fund other post employment benefits for its workers through October 2007, when the contracts expire.þþBut Delphi's Butler agreed with stakeholder attorney Glenn Kurtz that a Delphi document shows GM could be held responsible for $8.6 billion in such liabilities. If Delphi cancels its contracts, GM could file a claim against Delphi for that amount, Kurtz suggested.þþWhy then, Kurtz asked, is the company moving ahead with its request to abandon its contracts? Wouldn't a strike now do harm that could be potentially irreparable to the company?þþ''Depending on duration, it could be,'' Butler said.þþIn a filing, one Delphi customer asked the judge to bar the company's unions from striking should the parts-maker cancel its contracts.þþInternational Truck and Engine Corp. said a shutdown would have an ''enormous negative impact'' on the nation's economy, the Detroit Free Press reported in Thursday's editions. ''The seriousness of such work stoppages/strikes cannot be overstated.'' The maker of large trucks buys $46 million a year in Delphi parts.þþDelphi has proposed cutting its workers' wages from $27 an hour to $16.50 an hour. That proposal, however, would require a large contribution from GM.þþBut GM has not agreed to supplement Delphi workers' wages. Without such a contribution, Delphi is only prepared to pay its workers $12.50 an hour. The UAW has rejected that offer and unions have pledged to strike if Delphi cancels the contracts.þþDelphi also wants to close or sell 21 of its 29 U.S. plants, including six of its 10 plants in Ohio.þþA strike could have a devastating impact on Delphi and on GM, which relies heavily on Delphi parts for its own auto production.þþ
Source: NY Times
