Extent of crisis could hinge on court decision

Tuesday will be like any other day at Delphi’s Needmore Road plant in Dayton, Ohio. Workers will start arriving at dawn and by 6.30am the production line will be churning out brake parts for General Motors and other carmakers.

A few hours later in New York, however, a landmark court hearing will take place that could lead to a devastating strike at Needmore Road and dozens of other Delphi facilities – an outcome that would plunge the troubled company and GM, its biggest customer, deeper into crisis.

Delphi is seeking permission from a bankruptcy judge to cancel its labour contracts, clearing the way for plant closures and reduced pay and benefits for remaining workers.

The company, spun off by GM seven years ago, says the steps are necessary to save it from collapse but labour leaders have threatened a strike if new terms are imposed without union agreement.

A prolonged stoppage at Delphi would almost certainly bring GM production lines to a halt, because the carmaker relies on its former subsidiary for about one-sixth of its components. Analysts warn that such an event could tip GM towards bankruptcy.

A ruling from the judge is not expected for at least 30 days, giving Delphi and the unions time to seek the negotiated agreement that all parties say they want. But the United Auto Workers, the main union at Delphi, is pressing ahead with a strike authorisation vote to increase pressure on the company.

Outside the Needmore Road plant last week, nobody was taking the prospect of a strike lightly. “It would be mutually assured destruction,” said Jill, a part-time worker arriving for her afternoon shift. “Nobody wants a strike because we understand what it would mean for the company and this plant. But if we’re backed into a corner we might have no choice.”

The 37-year-old earns $26 an hour – close to the company’s top rate of $28 an hour and well above the median rate of $17.60 for manufacturing workers in the Dayton area. Delphi wants to cut pay to a maximum of $16.50 an hour by next year, which would include a $4 subsidy from GM. New recruits would be offered as little as $10.50 an hour.

“Most people are saying we could agree to about $22 an hour but not much less,” said Sue, another afternoon shift worker. “Everybody is prepared to make a sacrifice. But we all have mortgages and families to pay for. There is only so far we can go.”

The proposed cut would reduce Sue’s pay to the level it was eight years ago. “It’s demoralising to have worked so hard to climb the ladder only to get knocked back to where you started,” she said.

The plant is already on the list of 21 Delphi plants in the US earmarked for sale or closure over the next two years – including four out of the five facilities in the Dayton area. Only eight of the company’s US facilities would remain open beyond 2008 under the plan.

A strike “would give them more reason to shut the plant,” said John, who, like all of those interviewed, declined to give his full name. But others said the threat of closure meant workers had nothing to lose by striking.

Thousands of Delphi’s longest-serving and most expensive workers have been offered early retirement packages worth at least $35,000.

Every worker questioned outside Needmore Road who qualified for the buy-out said they planned to accept the deal, including Sue’s husband, a 30-year GM and Delphi veteran.

“We can afford to walk away because we’ve put our kids through college,” said Sue. “But the younger people have no option but to carry on because there’s no better manufacturing jobs out there unless they want to take the boat to China.”

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