GM could seek union concessions

Move might affect workers in Kokomo, 4 other former Delphi plants

By K.O. Jackson

Concessions made by automaker General Motors’ blue-collar workers last year could be put in place at former Delphi plants later this year.

Last May, believing it would help GM escape bankruptcy, United Auto Workers overwhelming approved concessions that reduced pay, holidays and benefits.

The concessions eliminated cost-of-living raises and performance bonuses, and workers said they would forfeit one paid holiday in 2010 and 2011.

Furthermore, other concessions included suspending tuition assistance, dental coverage and reducing prescription drug coverage.

That was then. This is now.

Although out of bankruptcy, GM is still seeking concessions. This time, it’s from workers at UAW-represented former Delphi plants.

In a recent memo to Michigan and New York UAW workers at plants GM acquired from Delphi, GM informed workers concessions may be coming: Wage freezes and $3-an-hour wage cuts among skill-trade workers.

Currently, the proposed concessions involve UAW workers at former Delphi plants in Saginaw, Mich., and Lockport, N.Y.

However, plants in Kokomo, Grand Rapids, Mich., and Rochester, N.Y., also could be subjected to some concessions.

When Delphi exited its Chapter 11 bankruptcy in October 2009, GM took back the five Delphi plants that supplied the automaker with needed parts.

If fully implemented, auto analysts said the concessions could affect more than 5,000 workers at the former Delphi facilities now called GM Components Holdings.

Ginny McMillin, president of UAW Local 292, has heard of the proposed concessions. She said the concessions only have been discussed and she’s unsure if they will affect her Kokomo work force.

Understanding the harsh landscape of the automotive industry, having the automaker seek additional concessions should not surprise union workers, said an automotive writer. In 2007, a UAW agreement cut Delphi wages from $28 an hour to $16.50 per hour.

Furthermore, GM is seeking to sell a former Delphi plant, Nexteer – once known as Delphi Steering – to Yubei (Xinxiang) Power Steering System Co. Ltd., a Chinese steering-parts maker.

To complete the transaction, GM needs to make a profit on the sale, said Bill Visnic, and the transaction has to be profitable for a potential purchaser.

The first place to cut costs and make a profit, Visnic added, is with workers’ costs. Union concessions also can assist in the sale.

“It’s been inevitable that this would happen. There’s a reason why GM spun [Delphi] off in the first place. They were costing GM money,” said Visnic, senior editor of Edmunds.com. “They [GM] want to get those [unprofitable] plants off of their books so they can compete with other [foreign] plants. Even with the cuts, they are still paying [workers] more than offshore plants.”

Michael Hicks, director of the Center for Business and Economic Research at Ball State University, said if the new concessions are enforced, “it’s going to be painful for the workers, but [pay] is not out of line of what other U.S. workers are being paid.

“These are labor costs, and I am sure they understand labor costs and the cost of doing business. My guess is it’s very unlikely workers would not understand this or accept this. It may be a painful procedure. But what they [GM] are asking from them isn’t unique.”

Union workers at the five former Delphi plants are not covered by a master agreement with GM, which means the five “Delphi-Keep” plants would negotiate a separate concessions agreement if necessary, McMillin said.

“We attended a meeting about this [earlier this month],” said McMillin. “And we [in Kokomo] really have no idea what to expect from it. Each local is looking at this differently.”

Besides the memo to the two facilities, nothing has been established concerning when or how the concessions will take place.

The only thing for certain is there is a new game in the automotive industry.

“GM is looking at how they can be competitive with other plants, and the ways to do that are to sell a plant, close a plant or cut wages,” said David Cole, chair for the Ann Arbor, Mich.-based Center for Automotive Research.

“That’s the name of the game in this business now. You get competitive or you die. That is what is driving this industry now. It’s very straight-forward and basic. GM understands it. You get competitive or you die.

“It is unfortunate that this is the way it is. But this is the way the game is now being played.”

• K.O. Jackson is the Kokomo Tribune’s business writer. He can be reached at 765-854-6739 or via e-mail kirven.jackson@ kokomotribune.com

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