Coopersville buyouts bode well for supplier, GM
June 24, 2006
Betts, who has signed up for the $35,000 early retirement offer, fears the attrition program designed to relieve Delphi of its workforce will leave the auto-parts plant without enough workers. Delphi's second attrition offer hasn't been formally issued for the remaining 90 workers.
"That could be a major train wreck. I'm hoping it's not, but I don't think it's avoidable," Betts said. "Time will tell. We're turning people over so fast it's crazy."
Thousands of similar decisions made through Delphi Corp. and General Motors Corp. bode well for the companies' going forward. The fewer active workers they're responsible for, the cheaper GM's bill to bail out bankrupt Delphi.
For GM, the attrition plan allows for a mass exodus of high-wage employees, which moves toward the goal of shedding 30,000 hourly U.S. workers by 2008. Reports and those close to the tallying say the number of GM workers accepting the early retirement or buyout offer has surpassed 28,000, and the number of Delphi workers is at 9,000.
Those empty spots on the assembly line give GM flexibility. It can hire cheaper temporary workers or relieve Delphi of its most-expensive remaining workers by allowing more employees to flow to the automaker's open positions.
And each attrition participant means one less union worker who might strike, which the UAW has threatened to do if Delphi unilaterally cancels labor contracts and slashes wages.
A full strike at Delphi would affect GM in a matter of days and eventually the entire auto industry, starting with other Delphi customers and GM's 3,000 other suppliers.
Delphi, which filed for bankruptcy Oct. 8, seemingly will be positioned well after all of the attrition is tallied, because it will have:
- Alleviated the shock of its sweeping reorganization plan that aims to close 25 of 33 U.S. plants and eliminate 23,000 hourly workers and 8,500 salaried workers.
- Simplified remaining negotiations with GM and the unions to reduce wages and benefits. Fewer workers mean fewer have to be convinced to accept concessions.
- More resources to devote toward technology initiatives. Earlier this week, Delphi won the first of three rounds of approval from the Department of Energy for a fuel cell that could be available for commercial vehicles or other uses by 2011.
"I think Delphi comes out of this smelling pretty good, quite honestly," said Erich Merkle, auto analyst for IRN Inc. of Grand Rapids.
Workers had until midnight to decide whether to accept the attrition offer. After workers check boxes and sign their name on the paper attrition packages, GM spokesman Tom Wickham said, local plant officials will go through the attrition responses, one at time, looking for errors.
The results will be e-mailed to a staff of GM corporate human resources workers. A preliminary tally won't be available until "the middle of the afternoon Monday," Wickham said. GM CEO Rick Wagoner has a news conference scheduled for 5:15 p.m. Monday to reveal the results.
There is concern that the attrition plan could be too successful, Merrill Lynch auto analyst John Murphy told clients.
"If the take rate is significantly above our estimate of 30,000, there may be some offsetting costs associated with hiring temporary workers to backfill." Murphy said. "This could pose a short-term problem, which we view as a high-class problem that can be resolved over time."
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