United Auto Workers members have voted to authorize a strike against auto supplier Delphi Corp. if the company fails to honor its labor agreements, an action that could have severe consequences for Delphi and its largest customer, General Motors Corp.
More than 95 percent of UAW members who voted at 21 U.S. plants approved the strike authorization measure, the union said Tuesday. The vote doesn’t mean a strike is imminent, but it does allow the union to call a strike if it feels one is needed as the two sides bargain over wages.
Delphi spokesman Lindsey Williams said the company intends to keep negotiating with the UAW.
“Their strike authorization vote doesn’t change our strategy, and that strategy remains to get a consensual agreement with all of our unions and GM,” Williams said.
GM also said it will keep negotiating despite the vote. GM, Delphi’s former parent, has already offered to fund buyouts for some Delphi hourly workers and could also be on the hook for retiree benefits or supplemental payments to boost wages.
“We are committed to reaching a consensual agreement with Delphi and with its unions, and the vote today does not change our commitment to trying to reach that agreement,” GM spokesman Jerry Dubrowski said.
GM’s shares fell 67 cents, or about 2.5 percent, to close at $25.53 on the New York Stock Exchange after word of the strike vote. Delphi’s shares no longer trade on the NYSE.
The UAW is by far the largest of Delphi’s six unions, representing 24,000 of the company’s 33,000 U.S. hourly workers. The International Union of Electronic Workers-Communications Workers of America, which represents 8,000 workers, also has voted to authorize a strike.
The United Steelworkers, International Association of Machinists and Aerospace Workers and the International Brotherhood of Electrical Workers, which represent more than 1,100 Delphi workers, said Tuesday they haven’t scheduled strike votes. Messages were left seeking comment with Delphi’s other union, the International Union of Operating Engineers, which represents around 20 workers.
The strike votes give Delphi’s unions more weight in ongoing wage negotiations. Delphi, which filed for bankruptcy protection in October, has proposed cutting its U.S. hourly workers’ wages from $27 an hour to $16.50 an hour, or as low as $12.50 an hour if GM doesn’t agree to supplement those wages.
Delphi was in U.S. Bankruptcy Court last week asking for permission to cancel its labor contracts after it failed to reach a deal with its unions and GM. Judge Robert Drain isn’t expected to rule until next month, and even if he allows Delphi to cancel its agreements, the company could keep its contracts in place while negotiations continue.
The union says it will call a strike “should Delphi use its bankruptcy court proceedings to unilaterally impose changes to the UAW-Delphi collective bargaining agreements.”
Jay Waks, who heads the employment law practice at the New York law firm Kaye Scholer, said the strike authorization vote is a commonly used tactic and could help break any impasse in the talks.
“There are very difficult issues on the table, costly to both sides,” Waks said.
Mark Sweazy, president of UAW Local 969 in Columbus, Ohio, said the strike vote sends the message that the union means business. His local, which represents about 700 hourly workers, approved the measure by a 96 percent margin.
“We don’t look forward to a strike, but if a strike should become necessary to prove a point or at least to get the two parties to communicate and make amends of the situation, we are all in favor of that,” Sweazy said.
A Delphi strike could harm Toyota Motor Corp., DaimlerChrysler AG’s Chrysler Group and other automakers that depend on Delphi parts. But it could paralyze GM, which remains Delphi’s largest customer. Analysts have said GM could lose up to $130 million a day during a strike.
GM Chairman and Chief Executive Rick Wagoner said in an interview last week that GM has stockpiled some parts but hopes to avoid a strike.
“We do have some banks of parts, but we’re speaking a matter of days, not months, so it’s not a question of avoiding the issue for any significant period of time,” Wagoner said.
Todd Jordan, a UAW-represented Delphi hourly worker and union activist from Kokomo, Ind., said he’s concerned there hasn’t been enough preparation for a strike on the union side. Workers should have been slowing down production so companies couldn’t stockpile parts and prolong the strike, he said. Jordan also said he believes the UAW should have asked GM workers to join Delphi workers on the picket line since their contracts were negotiated together.
“There’s more to a strike than just walking out,” Jordan said. “Membership are ready to fight for their livelihoods. I just hope that the leadership has the experience and wisdom to prepare them.”
At least one of Delphi’s customers has asked the court to block a strike. In a filing last week, International Truck and Engine Corp., which buys around $46 million in parts from Delphi each year, said Drain should bar the company’s unions from striking because of the negative impact it would have on the entire industry. Drain hasn’t ruled on that request.
Several Wall Street analysts have said the risk of a strike is relatively low because GM has the cash to prevent one. In a note to investors last week, KeyBanc Capital Markets analyst Brett Hoselton said he believes Delphi, GM and the UAW will reach an agreement as early as June that will avoid a strike. Hoselton said he expects GM will agree to supplement workers’ wages with the money it will save by ending its contracts with Delphi and buying cheaper parts from other suppliers.