Delphi asks judge for right to void labor contracts

NEW YORK — Auto parts supplier Delphi Corp. argued Tuesday that it must be given the right to cancel its labor contracts, telling a bankruptcy judge that is critical to the cost cutting required for its survival.

Delphi, seeking power which could lead to a devastating strike, told Judge Robert Drain that it has little choice.

“Without transforming Delphi’s North American operation to be competitive in North America, let alone globally, these debtors cannot reorganize and the corporation will fail,” Delphi attorney Jack Butler told Drain and a packed courtroom.

“Simply stated, Delphi must become competitive to survive,” Butler said.

But lawyers for the United Auto Workers union argued that letting the company cancel its contracts would give Delphi an overwhelming and unfair advantage, allowing it to force through deep wage cuts and rob its workers of long-promised benefits.

“This is like a poker game where they have an ace card given to them by the court before the rest of the cards are dealt,” said Bruce Simon, an attorney for the UAW.

“We’ll see what the evidence shows,” Drain said.

The trial in U.S. Bankruptcy Court for the Southern District of New York is expected to last for several days and Drain is not expected to rule for weeks.

But the stakes were very clear Tuesday as lawyers for the company, unions, creditors and other interested parties beseeched the judge.

Delphi has proposed cutting its workers wages from $27 an hour to $16.50 an hour. That proposal, however, would require a large contribution from General Motors Corp., Delphi’s former parent and largest customer.

But GM has not agreed to supplement Delphi workers’ wages. Without such a contribution, Delphi is only prepared to pay its workers $12.50 an hour. The UAW has countered that wage cuts must be achieved through negotiation between the unions, GM and Delphi, and that the latter has yet to offer a plan to resurrect itself.