Analysts: Delphi pact may be near

Analysts: Delphi pact may be near

	Published : Wed, 23 May 2007 21:46 By : Agencies Print this Story

DETROIT (AP) - Two months ago, top officials at the United Auto Workers rejected a Delphi Corp. contract offer that they called insulting and criticized the use of the bankruptcy court as a way to drive down wages.

Now that the UAW has a counteroffer on the table, there have been weeks of silence about the negotiations and union officials say the struggling auto parts maker has agreed to give temporary workers a paid holiday for Memorial Day.

The union officials spoke on condition of anonymity due to the sensitive nature of the talks.

Several industry analysts say these are signs that a deal could be near, bringing an end to more than a year of contentious talks aimed at cutting Delphi's labor costs to better match competitors in the rough-and-tumble auto parts business.

'My experience with negotiations is when both sides shut up, they are close to an agreement,' said David Healy, an analyst with Burnham Securities.

Delphi and the union won't comment on the holiday pay or on whether an agreement is close.

David Cole, chairman of the Center for Automotive Research in Ann Arbor, said he sees the counteroffer, the silence and the holiday pay as signs that a deal is within reach.

'There's no direct evidence, but there's enough circumstantial evidence where you say uh-huh, there's some positive things happening here,' Cole said.

Union officials at several Delphi plants say the company had opposed holiday pay for temporary workers in the past before agreeing to it within the past week or so.

Kevin Tynan of Argus Research, a New York-based equity research company, said it's likely that Delphi got something in return for the holiday pay.

'The fact that it's out there on the table makes you think that there's some give-and-take going on,' he said.

Troy-based Delphi, the parts-making operation of General Motors Corp. until it was spun off in 1999, has been operating under bankruptcy protection since October 2005. It hopes to emerge from Chapter 11 later this year.

The company has said it can't compete due to its high labor costs. It has asked a federal bankruptcy court in New York for permission to void previous labor contracts, but it has said it prefers a negotiated settlement to court action.

A settlement between Delphi and its unions is needed before private equity firms will invest up to $3.4 billion that Delphi needs to get out of Chapter 11.

The firms, Appaloosa Management LP and Harbinger Capital Partners Master Fund I, can back out of the deal if no agreement is reached with the unions on wages, benefits and other issues. Cerberus Capital Management LP, the private equity firm that signed up to buy Chrysler last week, had been in the group of investors but Delphi has said Cerberus may back out.

Delphi lost $533 million in the first quarter and $5.5 billion for all of 2006.

GM is involved in the complex labor negotiations because it is on the hook for $6 billion to $7.5 billion in liabilities for Delphi pension and retiree health care expenses. The nation's largest automaker also has estimated that its labor expenses for Delphi include another $500 million in 2007 and $100 million to $200 million for several more years, and that may come as wage subsidies for Delphi workers.

Last week, GM Chief Executive Rick Wagoner said negotiations were progressing, but he didn't think a deal was imminent.

'Let's try to move and get Delphi wrapped up. We have got to be well-prepared for the (UAW) negotiations this fall,' he said.

Union officials expect that once a deal is near with the UAW, Delphi will begin negotiating in earnest with its other unions.

The UAW represents about 17,000 hourly Delphi workers. The International Union of Electronic Workers-Communications Workers of America is the company's second-largest union with about 1,800 workers.

Cole and other industry analysts have said a deal has to be worked out soon to keep the talks from interfering with the UAW's national bargaining with the Detroit Three automakers scheduled to formally begin in July.