Two prospective buyers of General Motors Co.'s Nexteer Automotive steering business are “deeply disappointed” about a concession package that UAW members in Saginaw, Mich., rejected this month and could withdraw their bids for the unit, according to an internal GM letter sent to Nexteer CEO Robert Remenar and obtained by Automotive News.
“In the event that these bids are withdrawn, GM will have no alternative but to proceed with a plan to wind down Nexteer's Saginaw operations,” said the letter, dated Tuesday, June 22, from Scott Mackie, GM's executive director of new business development.
Mackie concluded the letter by saying GM hopes Nexteer can approve a “competitive labor agreement” in Saginaw before Wednesday, June 30, when a transaction signing commitment is set to expire.
GM spokeswoman Kimberly Carpenter confirmed the authenticity of the letter. Nexteer is profitable, she also said.
Executives at Nexteer did not return phone calls seeking comment.
GM has been trying to sell Nexteer since the automaker took the business back from Delphi Corp., along with four unrelated Delphi parts plants in the United States, so that Delphi could emerge from Chapter 11 bankruptcy last autumn. Nexteer makes mechanical and electric steering systems as well as half-shafts.
The company, which has other plants worldwide, posted global revenue in 2009 of about $1.6 billion.
Automotive News reported last year that a Chinese company was interested in Nexteer. GM did not identify the two prospective buyers.
The sale has been complicated by the refusal of Nexteer's nearly 2,000 UAW-represented employees in Saginaw to approve additional wage and benefit concessions.
This month they voted roughly 3-to-1 to reject proposed midterm changes in an existing contract that would have frozen wages for three years. The changes also would have dropped the new-hire wage from $14 an hour with full medical insurance in the current contract to $12 an hour with medical insurance that would cover a worker but not that worker's family.
A $12-an-hour wage, without overtime, generates annual income of $24,960. The federal poverty level for a family of four is $22,050.
Dustin Meyer, a veteran gauge repairman at Saginaw who voted against the concessions, said he has heard rumors that the company and UAW would try to schedule a revote on the contract in the coming days. He said the low new-hire wage caused him to balk at the contract. Meyer said he earns about $17 an hour.
The current contract at the plant runs through September 2011. The proposed new contract is for five years.
UAW Local 699 President Troy Newberry said that a revote has not been scheduled.
Workers at Nexteer were the second group at the so-called Delphi take-back plants to reject concessions. Workers at GM's valve-lifter plant in Wyoming, Mich., also voted down a concessionary contract this spring that the UAW leadership had approved and brought to them for ratification.