Supplier Pact is Official: New Hires to Make Less at Delphi and Visteon

From Detroit Free Press

DETROIT — The country’s two largest auto-parts makers, Delphi Corp. and Visteon Corp., formally announced Thursday their 7-year UAW contract that will substantially reduce pay for their future UAW workers, and requires them to pay for more of their health care and much of their retirement.

The new pact sets future Delphi and Visteon UAW workers’ starting wage at $14 an hour, which can grow to $14.50, $16.50 or $18.50, depending on the job. Current UAW workers at Delphi and Visteon — who are not affected by this new deal and can’t vote on it — make on average $24 an hour, though hourly rates for some top $36 an hour.

In return, Delphi and Visteon will agree not to close any of their U.S. plants without UAW approval until 2011. Without giving specifics, news releases from Delphi, Visteon and the UAW also said the two suppliers would make substantial investments in their UAW plants.

“This agreement commits Delphi to make significant investments in the long-term future of its UAW-represented facilities in the United States,” said UAW President Ron Gettelfinger. “Both the UAW and Delphi faced many hard choices during these negotiations, but we stepped up to our mutual responsibility to work together to keep good manufacturing jobs in America.”

Two-tier wage plans such as this were long forbidden by the UAW because of the rancor that can occur when two workers are paid dramatically different wages for doing a similar job. The fact the UAW is negotiating lower wages for new workers in order to preserve the pay and benefits of existing members is seen as an example of how far the union is willing to go to reverse decades of membership declines.

Like current UAW members, new hires at Delphi and Visteon will not have to pay monthly health-care premiums. However, their prescription drug co-payments will be 50 percent higher, at $7.50 for generic drugs and $15 for brand-name drugs.

New hires will also pay annual health-care deductibles up to $1,000 for an individual or $2,000 for a family. Current UAW members have top-shelf health-care benefits and pay no health-care deductibles.

This new agreement does not address buyouts or retirement incentives of existing UAW workers at Delphi or Visteon, which many workers had hoped it would.

The UAW said it is still discussing the fate of currently shuttered Delphi plants in Flint; Tuscaloosa, Ala., and Olathe, Kan.

The UAW said the new deal also “commits Delphi to the principle of ‘equivalence of sacrifice’ so that the sacrifices of UAW-represented workers are reflected in the pay and benefit levels of salaried employees and management.”

Delphi and Visteon, which make parts ranging from steering systems to CD players, have struggled to compete with competitors that pay their workers lower wages. Delphi and Visteon are the former parts operations of General Motors Corp. and Ford Motor Co., respectively.

Executives from the two hailed the new pact. Both suppliers are expected to quickly try to send many of the current UAW workforce back to their former parent companies. Delphi, for example, has already had 1,200 of its workers move back to GM and expects another 1,800 to do so by year-end.

“As a result of transitioning to a more competitive cost structure in our UAW facilities, we will be better positioned to compete for and win new business,” said Visteon Chief Operating Officer and President Michael Johnston.

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