The overwhelming rejection of a wage-cutting agreement by Delphi Corp. workers at the Lockport plant has put the 2,200 jobs at the plant in jeopardy, a top company executive said Thursday.
Ronald M. Pirtle, president of Delphi Thermal Systems, said the lopsided rejection by local workers of a four-year contract proposal -- despite it being approved by 68 percent of Delphi workers nationwide -- casts doubt on the plant's future.
"I am no longer confident that there is a commitment by joint leadership or the employees to make Lockport competitive," Pirtle said in a June 29 letter to plant manager Scott A. Kitkowski. "Lacking this commitment, you will not become a viable operation, leaving your future in jeopardy."
The letter comes as workers prepare for a follow-up vote on how the new contract will be implemented at the plant and could be viewed as an effort by management to increase pressure to approve that agreement. A copy of the letter was obtained by The Buffalo News.
Last week, 80 percent of voting members of Local 686, United Auto Workers, rejected the deal by a count of 1,107 to 274. The agreement called for senior, high-wage production workers to have their wages cut by 40 percent starting Oct. 1.
The wage-cutting agreement puts the company on a path to emerge from bankruptcy. Workers at only two Delphi sites, Lockport and a small plant in Alabama, rejected the deal, but terms of the deal still apply to them.
The future of Delphi's Lockport plant, the region's largest manufacturer, has long been a source of speculation and concern, given its significant role in the local economy. The worries deepened when Delphi filed for bankruptcy in 2005.
After the Lockport workers' decisive "no" vote, some analysts last week expressed views similar to Pirtle's: A hard-line stance by the plant's employees, if carried over to the second vote, might undermine the plant's work.
Pirtle is very familiar with the Lockport plant. He led the Thermal Division from there before he was relocated to Delphi's headquarters in Troy, Mich. In his sharply worded letter, he called the Lockport vote "stunning and extremely disappointing." He noted that the Niagara County plant was one of only four U.S. sites that Delphi had announced that it would keep. Ten others are scheduled to be closed, and four others are set to be run by General Motors or its nominee.
"Frankly, it is difficult to understand why the very agreement which affirms Lockport as a "Keep Site" would be so overwhelmingly rejected!" Pirtle wrote. "The resulting message appears to be that this work force is unwilling to change, even when it means they could save their own business."
UAW members at Lockport and other Delphi plants are expected to soon have another agreement to vote on. With the national deal ratified and awaiting Bankruptcy Court approval, individual Delphi plants will negotiate their own "competitive operating agreements" with the union. Such agreements deal with specifics such as work rules and overtime, with the objective of reducing costs.
Lockport plant workers who voted against the national contract expressed frustration with the deep wage cuts. Compared with other Delphi plants, the Lockport site has a large percentage of higher-paid senior workers.
"I think the spread of the vote was a surprise to everyone," said Patrick M. Heraty, a Hilbert College business professor who follows the automotive industry.
Heraty described last week's result as a "protest vote" by the Lockport workers against not only wage cuts, but also high lawyers' fees and executive compensation. But Heraty said he believes that the workers understand what is at stake in the next vote.
"I would think when we get to the local agreement, the results would be different," he said.
That vote will need to be decisively "yes" to convince Delphi management that the plant's work force is ready to move forward within a restructured company, he said.
Heraty said he thinks the ball is in the UAW local leadership's court to make that point. "This vote [on a local agreement] is bigger than the UAW and bigger than Delphi. It's about keeping good-paying jobs in the community." Negotiations of the local agreements are supposed to be completed within 60 days of the national deal's ratification, which would be in late August. Once a tentative deal is reached, UAW members will cast ballots.
Lindsey Williams, a Delphi spokesman, said Pirtle was not available to comment further on the letter, and Williams said he could not comment on an internal communication between company officials.
Paul Siejak, president of Local 686 Unit 1, which represents the Lockport plant workers, said in an e-mailed statement that he had not seen the Pirtle letter. But he said he wanted to reassure Pirtle that "all parties" will live up to the new UAW-Delphi deal and that he "should not be concerned about the Lockport site's work ethic and our ability to meet challenges."
"If he is concerned and/or upset about the recent 'no' vote from our site, he needs to understand the emotion involved when more than half of your work force at one facility is facing 40 percent wage and also benefit reductions," Siejak said.
Siejak called on Pirtle, as a "good-faith gesture" to workers, to take a pay and benefit cut or forgo an executive bonus awarded through Bankruptcy Court.
The national deal calls for Delphi to devote $48 million in engineering and capital investment at the Lockport site. That investment would support new-product programs for a variety of HVAC and powertrain cooling products planned by GM.
Pirtle's critical comments appear to raise the possibility of Delphi's redirecting work pledged for Lockport to another Delphi plant, should the company continue to be dissatisfied with the Lockport site.
Pirtle said that after the Delphi plant's scheduled annual two-week shutdown, which is under way, he will schedule meetings to "review Lockport in depth and carefully evaluate all options."
He directed Kitkowski to conduct a "candid reassessment" of the Lockport site and "be objective in determining what you can and cannot accomplish with regards to competitive improvements."
"The lost credibility," Pirtle wrote, "is almost impossible to re-earn; your team must fully understand that they have a challenging road ahead."