TROY (AP) – Delphi Corp.’s hourly workers could see wage and benefit cuts as early as this spring, officials from the auto supplier, which sought bankruptcy protection last weekend, said yesterday.

Angela Cesere
Delphi Corp., Chairman and CEO Robert Miller answers a question during a news conference yesterday. (AP PHOTO)

Delphi Chairman and CEO Robert Miller said the Troy-based company plans to propose cuts to its unions on Oct. 21. If an agreement isn’t reached by mid-December, Delphi will ask a bankruptcy judge to void its contracts. Delphi attorney John Butler said he didn’t expect any litigation over the contracts until the first quarter of next year.

Miller said he will work closely with the United Auto Workers union, which represents most of the company’s 30,000 U.S. hourly workers, to craft a new contract. He said Delphi could have asked the bankruptcy court for emergency relief from its labor contracts but didn’t.

Miller said he understands workers are angry, but the company is paying hourly workers two to three times more than its competitors. Delphi’s autoworkers are paid $27 an hour, and their total wage and benefit packages are worth around $65 an hour. Delphi has proposed cutting that by about 60 percent.

“I do not blame these people. They are being hurt. Their expectations are being dashed,” Miller said at a news conference. “Globalization has swept over them, and they are extremely angry.”

In a memo sent this week, UAW Local 686 in Lockport, N.Y., told Delphi workers to prepare for a strike. It was one of the first indications that unions could be planning to disrupt Delphi’s operations.

Miller said the best thing workers can do for their own financial security is to stay on the job.

“I believe the UAW has competent, adult, honest leadership,” Miller said. “They understand the situation, fundamentally understand that absolutely nothing can be gained by a strike at any Delphi facility other than to hasten and expand the number of plants that might have to close and further jeopardize any chance for salvaging and restoring our pension plan.”

Miller also fiercely defended his decision to boost a severance package for 21 of Delphi’s top executives tomorrow, the day before Delphi filed for bankruptcy protection.

Under the new agreement, executives will be eligible for 18 months of pay if Delphi lays them off. Previously severance packages were capped at 12 months. In exchange, executives signed agreements promising not to work for competitors for the 18-month period.

Miller said the industry average for a severance package is 24 months and Delphi wants to keep its executives because looking for new ones would be disruptive. He added that Delphi’s executives haven’t gotten bonuses in three of the last four years and their stock and stock options have lost value.

“There is no question they could get better compensation elsewhere, and I know for a fact the headhunters are swarming,” Miller said.

Miller isn’t eligible for the package, and he said he might cut his own $1.5 million base salary as the company’s restructuring proceeds.

“I can be fired tomorrow with no severance, no pension, no bonus, not even a ticket home,” Miller said.

Miller wouldn’t elaborate yesterday on which plants are at greatest risk for closure. He said Delphi will take an extremely hard look at every plant and see whether it can make it viable.

“If we do all this right, Delphi will remain one of the world’s leading global automotive suppliers. It will be a jewel of a company and a technological powerhouse for years to come,” said Miller, a restructuring expert who was hired in July.

“But if we do it badly, Delphi may be broken up into small pieces. The impact of a collapse could potentially injure most of the world’s automakers and perhaps fatally wound General Motors. I am determined not to let that happen.”

Delphi filed for Chapter 11 bankruptcy protection Saturday after failing to reach a restructuring agreement with the UAW and General Motors Corp., its former parent.

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