The United Auto Workers has ratified a new contract with bankrupt auto parts maker Delphi Corp., a former subsidiary of General Motors Corp., the union said Friday.
The agreement, which includes dramatic wage cuts and job losses, allows GM to sidestep a crippling strike at its largest parts supplier.
The new contract will reduce the top wage for Delphi employees from 27 dollars an hour to 18.50 dollars an hour.
Workers will receive as much as 105,000 dollars to accept the wage cuts or 140,000 dollars to leave the company.
Delphi will also close 10 US plants, sell four others, hand three back to GM and keep the remaining four plants under a plan to emerge from bankruptcy protection by year's end.
GM set aside seven billion dollars last month to complete the restructuring of Delphi and cover the liabilities it would assume under the deal.
GM spun Delphi off in 1999 and still depends on it for nearly 14 billion dollars worth of parts annually.
The settlement will allow the automaker to purchase more components at less cost on the global market, including from suppliers in China and India, said GM's chief financial officer, Fritz Henderson.
The agreement caps off more than 20 months of often difficult and contentious negotiations.
The UAW objected strenuously to Delphi's October 2005 bankruptcy filing, accusing Delphi's management of being greedy incompetents who deliberately steered the company into bankruptcy court in order to break down hard won union gains.
Delphi chairman Robert Miller added to the tensions by repeatedly threatening to ask the bankruptcy judge to set aside the union's existing labor pacts.
UAW president Ron Gettelfinger countered with the threat of a strike at Delphi that could have shuttered GM's production.
Delphi continued to restructure during the negotiations and cut its unionized workforce in the United States to about 18,000 from the 34,000 it employed when it filed for bankruptcy in 2005.
In a reflection of the acrimony that had characterized the discussions, the UAW did not refer to Delphi by name but only as GM's “former parts operation” in a statement noting that 68 percent of workers voted to ratify the agreement.
