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Union approves Delphi rescue plan Union approves Delphi rescue plan
(about 1 hour later)
Workers at US car parts firm Delphi have agreed a restructuring plan that the company said was vital if it was to emerge from bankruptcy protection. Workers at US car-parts firm Delphi have agreed a restructuring plan that the company said was vital if it was to emerge from bankruptcy protection.
The vote was among 17,000 members of the United Auto Workers (UAW), the largest group of Delphi's employees. The vote was among 17,000 members of the United Auto Workers (UAW), the largest group of Delphi employees, who are split over eight factories.
According to union, 62% of the workers who voted backed the company's plan. Under the plan, Delphi will shut a number of its plants and cut wages.
Delphi used to be owned by General Motors, and became a separate firm in 1999 before making losses and filing for Chapter 11 protection in 2005. The Delphi deal comes as some of the biggest car firms in the US are about to start renegotiating staff contracts.
Chapter 11 bankruptcy projection gives a US firm time to restructure its finances while protected from its creditors. Two tier
Delphi was owned by General Motors, but separated in 1999, before filing for bankruptcy protection in 2005.
Called Chapter 11, bankruptcy projection in the US gives a firm time to restructure its finances while protected from its creditors.
Today, Delphi is GM's largest supplier and the threat of strike had raised concerns among investors and analysts about the impact on GM's business.
Delphi is really poised to be a powerhouse, because they have a technology base that is really strong David Cole, Center for Automotive Research
Delphi's main business is centred on producing electronics, safety systems, and heating and air conditioning systems.
At the heart of the restructuring deal was a pay agreement that will see worker's wages cut from about $27 (£13.5) an hour to between $14 and $18 a hour.
An agreement had proved difficult to reach because Delphi had about 4,000 workers who were taken on when the firm was owned by GM and were on better terms than newly hired staff.
In order to get the wage deal approved, Delphi offered long-term employees a lump sum of $105,000 over three years, as well as extending its offers of early retirement. Some workers also have the choice of returning to GM.
Not all of Delphi's workers backed the deal, however, and in Lockport, New York, members voted against the deal.
Delphi now has to get approval for the deal from the US Bankruptcy Court. The company expects to emerge from Chapter 11 by the end of this year.
Powerhouse?
The deal is a good one for Delphi, analyasts said, adding that it set the company up to emerge from Chapter 11 in a strong position.
"I think Delphi is really poised to be a powerhouse, because they have a technology base that is really strong," said David Cole, chairman of the Center for Automotive Research.
He said that it may also show a willingness on the part of unions to make difficult concessions in order for a compay to keep operating and take on foreign rivals many of which have been boosting market share in the US.
GM, Ford and Chrysler are due to hold contract talks with the UAW later this year.