Delphi, Union Reach Tentative Wage Pact

The AP reports:

Struggling auto parts maker Delphi Corp. reached a tentative wage-cutting agreement Friday with its largest union in what may set the pattern for future pay in the U.S. automotive parts industry.

The deal, which still must be voted on by Delphi members of the United Auto Workers, was signed just before a 1 p.m. meeting between the UAW leadership and presidents of the union's locals.

Details of the agreement were not released, but Delphi said in a statement it's a "significant milestone" in the company's quest to emerge from Chapter 11 bankruptcy protection. The union also said details are being withheld until a ratification vote by members.

The pact also is a requirement for Delphi to get up to $3.4 billion from private equity investors that it needs to escape from Chapter 11. The supplier lost $533 million in the first quarter and $5.5 billion in 2006.

Union officials, who spoke on condition of anonymity earlier this week because the deal had not yet been completed, said the pact would cut wages for longtime UAW workers from around $27 per hour to between $14 and $18.50.

No word yet from economists who say union labor costs are always "sticky".