This week could be pivotal for Delphi Corp. and its workers.
Delphi on Friday could ask a bankruptcy court judge to cancel its labor contracts if the auto parts supplier is not close to completing a deal with the United Auto Workers and General Motors. Delphi says it needs to reduce its labor costs to remain competitive.
The UAW and other unions representing workers at Delphi plants have warned they might go on strike if the contracts are thrown out. Such a walkout could devastate GM's ability to make cars and trucks.
The outcome is being watched closely locally, since Delphi's Lockport plant employs 3,800 people. GM's Town of Tonawanda engine plant and American Axle and Manufacturing's local operations would also be affected.
A UAW leader recently expressed pessimism about progress in the talks. But David Cole, the chairman of the Center for Automotive Research in Ann Arbor, Mich., said he believes there is reason to be hopeful that a breakdown can be averted. "If progress is being made, they might be able to push the date [back]," he said.
That has happened before: Delphi last year said it wanted a resolution by Dec. 16, but it delayed action until this month.
Cole said he considers the lack of detail disclosed about the complex three-way talks between Delphi, GM and the UAW a positive sign.
"They appear to be making some progress, by virtue of the fact that not a whole lot of leaks are coming out of the discussions," Cole said. "Generally, the way we view this is, the loudest noise is the one you don't hear."
The swirl of tension at Delphi has left some workers at its Lockport plant questioning whether their employer is stockpiling parts to keep its supply chain to GM flowing in case of a walkout. Gregg Shotwell, a UAW member in Ohio with a dissident group called Soldiers of Solidarity, said he has heard reports of product stockpiling from members at different Delphi plants.
Lindsey Williams, a Delphi spokesman, insisted no such stockpiling is occurring.
The Lockport plant produces only as many parts as its customers order, Williams said. "It's not building anything over and above the orders we currently have from any existing customers."
But Paul Siejak, president of UAW Local 686 Unit 1, which represents workers at the plant, said he is skeptical.
"There may be some inventory being stockpiled," Siejak said. "It doesn't seem like it's a very significant buildup of inventories, but it is a concern."
Siejak said UAW vice president Richard Shoemaker downplayed any possible stockpiling, when he spoke to UAW members in Detroit in late January.
"He wasn't that concerned about it, because there's not enough product that they could build up with all the Delphi parts going in the assembly of General Motors vehicles," Siejak said.
Cole said he doubted that Delphi was stockpiling. "With just-in-time [manufacturing], I would doubt that has any bearing," he said.
GM, Delphi's top customer, said it increased its North American vehicle production in January by 9 percent from a year ago. It also has forecast a 6 percent increase in its first-quarter North America production from what it churned out in the same three-month period in 2005. Part of GM's production increase is driven by new-model launches.
GM dealers in the United States reported a 6 percent increase in sales in January from a year ago.
Some hourly workers at Delphi's Lockport plant say overtime hours at the site remain plentiful. Williams, the Delphi spokesman, said while overtime might be available in some departments, the total amount of overtime at the Lockport plant is down 10 percent from the fourth quarter of 2005.
Cole said the strike threat that hangs over Delphi could have ramifications beyond the auto parts supplier and GM. A tense labor climate could deter other automakers from investing in manufacturing facilities in the Northeast, he said.
"This is a story that's going all over the world," Cole said. "The places that are competing against us for investment are putting this in front of those who are considering the investments."
Cole said rank-and-file workers at Delphi are facing a different future at the company, as Delphi tries to get its costs in line.
For instance, he expects to see a restructuring of the rules for the company's "jobs bank," which preserves wages and benefits for laid-off workers. GM and Ford have similar programs.
"It's not affordable as it is right now," Cole said. "These companies will just go away."