TROY, Mich. -- Delphi Corp. today announced a critical milestone in its restructuring. The company has reached agreement with the UAW and General Motors Corp. on a special hourly attrition plan, including the opportunity for UAW-represented Delphi employees to retire from GM. GM has agreed to provide substantial financial support under the proposed plan. The plan enables a more rapid transformation to a reduced labor cost structure across Delphi's U.S. manufacturing operations. While subject to bankruptcy court approval, the plan provides financial incentives for certain types of retirements to ease the transition into retirement and permits the flow of up to 5,000 UAW- represented Delphi employees to employment with GM.
"We remain focused on the transformation of Delphi in order to emerge successfully from the Chapter 11 reorganization process and provide a strong foundation for our future," said Delphi President and Chief Operating Officer Rodney O'Neal. "An accelerated attrition plan will help enable the transformation of our U.S. manufacturing and support operations into a much more competitive cost base."
The proposed plan for eligible U.S. hourly employees includes normal and early retirements and UAW flowbacks to openings at General Motors facilities. Eligible UAW-represented Delphi employees may elect to retire from Delphi or flow to and retire from GM.
Approximately 13,000 hourly union-represented employees may be eligible to participate in the plan. Certain eligible U.S. hourly employees may be offered a lump sum payment of $35,000 to retire. 5,000 UAW-represented employees will have the opportunity to flowback to GM through the end of September 2007.
Under the proposed plan, GM has agreed to assume the financial obligations related to the lump sum payments to be made to eligible Delphi U.S. hourly employees accepting normal or voluntary retirement incentives and certain post-retirement employee benefit obligations related to Delphi employees who flow to GM under the plan.
The company said the plan is subject to a number of conditions, including approval by the U.S. Bankruptcy Court, which Delphi will seek to have heard at the April 7 omnibus hearing. A motion seeking approval of the plan and authority for similar plans for IUE-CWA, USW and other represented hourly employees will be filed with the Bankruptcy Court later today, and a report regarding the plan agreement will be filed on Form 8-K with the Securities and Exchange Commission.
Delphi will continue talks in an effort to achieve a comprehensive agreement no later than March 30, 2006. Absent agreement with all parties, Delphi will file no later than March 31, 2006 its motion under Sections 1113 and 1114 of the U.S. Bankruptcy Code to initiate the process of seeking court authorization to reject the collective bargaining agreements and terminate hourly post-retirement health care plans and life insurance.
Delphi filed for Chapter 11 reorganization of its operations in the United States on Oct. 8, 2005 in the U.S. Bankruptcy Court of the Southern District of New York and under the jurisdiction of Judge Robert Drain.