U.S. judge approves Delphi-GM-UAW attrition plan

NEW YORK, April 7, 2006; Reuters reported that bankrupt auto parts maker Delphi Corp. won court approval on Friday for its attrition agreement with former parent General Motors Corp. and the United Auto Workers Union.

The deal frees Delphi to offer GM-funded retirement incentives to about 13,000 UAW members, and allows 5,000 workers a chance to return to factory jobs at GM.

Delphi, which last week asked the court for permission to reject its labor contracts, has described the attrition plan as a first step to slashing wage and benefit costs and reversing losses in its U.S. operations.

It argued the voluntary program presented "a menu of options and opportunities" to workers, making it possible for at least some blue-collar employees to manage "a soft landing."

In his ruling, Judge Robert Drain agreed with that argument.

"The agreement provides an important option for the debtor's UAW workforce to exercise a right either to be bought out or to migrate from the company to GM," Drain said.

"This right is significant in that there is tremendous uncertainty with regard to the future of the debtor's operation and the future of the collective bargaining agreement."

Judge Drain said negotiating a new union agreement may be easier as a result of his approval of the attrition program.

He also said he would approve a cooperation agreement between GM and unsecured creditors. The creditors' committee had asked for GM documents detailing its ties to Delphi so it could estimate the scope of GM's claim.

Lawyers for GM said in court that the claim could exceed $4 billion if all eligible workers opt into the attrition program.

The motion to void existing labor agreements was not on Friday's agenda. It is scheduled for a hearing in May.