From Detroit Free Press

DETROIT -- Delphi Corp. CEO Steve Miller said Monday night that the supplier, General Motors Corp. and the UAW are discussing ways to soften the impact of potential pay and job cuts and prevent a strike.

Miller, speaking at the Automotive News World Congress conference in Dearborn, MI, did not say how long these meetings have been occurring.

"They are ongoing. They are constructive," Miller said. "Now that we have three of us at the table, we will get something done.”

Delphi filed for bankruptcy on Oct. 8 after negotiations with its unions and a bailout from its former parent company GM failed to materialize. But talks have picked up again.

"Now that the three of us are together, with General Motors giving some financial assistance for what I call a soft landing, my optimism is way up."

A Delphi strike would have grim ramifications for GM. If the flow of Delphi parts to GM plants stops, some could shut down in days. Miller described the tone of the discussions as positive, adding that he "refuses to believe it will end in a train wreck."

He has previously said a GM bailout could come in several forms, including gradual pay reductions and allowing some Delphi workers to "flow back" to GM.

So far, the bankruptcy process has been chock-full of demands and threats from Delphi and the UAW.

Delphi demanded hourly wages averaging $12.50 an hour, well below its current $27 an hour range. Moreover, it proposed cutting 24,000 jobs and many of the benefits for those that remained.

The UAW, insulted by the demand, said it would not take a vote on Delphi's proposal and could possibly strike. Even more dangerous is a rebellious faction of UAW members called “Soldiers of Solidarity,” who have been holding regular strike preparation meetings across the country, drawing no less than 150 enraged workers at each meeting.

With strike threats intensifying, GM CEO Rick Wagoner negotiated a plan with Miller just before Thanksgiving to temporarily forgo price reductions it had demanded on parts it buys from Delphi.

UAW Vice President Richard Shoemaker has repeatedly said the union was left out of those discussions.

Erich Merkle, auto analyst for IRN Inc. in Grand Rapids, MI, said he believes there's a much lower likelihood of a strike than many people believe.

"This bankruptcy has been thoroughly thought through on the front end, and every move they make appears quite calculated," Merkle said. "We believe a deal will need to be reached, simply because the alternative would be untenable for everyone involved."

Merkle and IRN President Kim Korth said that Delphi must reach a deal because it has spent the last six years diversifying its customer portfolio and a strike would "send shock waves through the entire system, beginning with the Big Three automakers and reverberating down to the lowest-tier supplier." Delphi's dealings with GM have declined since its spin-off in 1999, taking it from approximately 70 percent of its business to 54 percent today.

"The very fact that Delphi has worked so diligently over the years to diversify itself away from GM now puts a much larger portion of the industry at risk," Merkle said. "The only North American automakers with limited exposure to Delphi are Toyota and Honda."

Toyota Motor Sales USA Inc. President and COO Jim Press gave a speech immediately after Miller, commenting that he and Miller shared similar views on globalization and the need for a strong GM.

"There is no joy in the difficulty they are having," Press said of GM's declining market share and plummeting sales. "We have no interest in becoming No. 1. We don't have anything like that in our agenda"

Copyright 2006 Detroit Free Press. All Rights Reserved.

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