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Its Ranks Depleted, Delphi Union Sees Better Days Ahead

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WARREN, Ohio — There was a time in the not that distant past when an advertisement posted by Delphi Corp. announcing it was hiring employees for its Mahoning Valley operations would draw 2,000 or more applicants. They would form a long line that snaked out the doorway.

Nearly 10 years since the company filed Chapter 11 bankruptcy, that level of attraction is no longer there, say officials of IUE-CWA Local 717, which represents hourly workers at the company’s plants in Warren and Vienna Township. Even in the midst of a robust auto market, it’s hard to find employees willing to commit to a company that has undergone such sweeping changes.

“They were supposed to hire six people recently,” says Brian Lutz, shop chairman of Local 717. “Two showed up.”

The anemic interest reflects the changing dynamics of the workforce at Delphi. To be part of that workforce was to hold one of the most coveted manufacturing jobs in the region.

But since their employer entered bankruptcy, many Delphi production workers have accepted buyouts, retired or left for other jobs. Those who remained accepted steep wage cuts in return for buy-downs of $35,000 annually over three years. Among the changes was a tiered wage system that pays entry-level production workers around $13 an hour and a top wage of $18 an hour – well below the pre-bankruptcy rates of $28 per hour these employees once enjoyed.

Employees in the skilled trades fared better, Lutz notes. “Trades today are about $29 an hour, and there have been some wage increases,” he says. Before Delphi filed for Chapter 11, the skilled tradesmen earned $32 an hour.

Those who remained took a cut to $26.50 plus a three-year buy-down of $25,000 a year.

“The attitude here is that we helped this company through bankruptcy by taking wage cuts, and by bringing in newer workers at lower wages,” Lutz says. “We’ve brought them the ability to make serious profits.”

Delphi reported its net income rose 11.5% to $1.35 billion in 2014 compared to a year earlier, citing better-than-average growth in North America and Asia. Over the last four years, its stock has climbed to above $78 a share from $21.

Business has never been better, Lutz says, and orders are so abundant that employees are working mandatory overtime shifts with that much overtime beginning to take a physical toll on his membership.

“The auto industry is booming,” he continues. “And we’re at the top of the supply chain. There’s plenty of overtime, but people are burned out.” Meanwhile, the company is reluctant to add new hires – at least through the first quarter ending March 31, he says.

“I wish we wouldn’t work so much overtime. But again, these are some of the best problems we could have because we’re splitting at the seams.”

Higher wages and concerns about new work rules such as mandatory overtime are among the priorities for the IUE-CWA as contract negotiations draw near, Lutz says. The current agreement expires in October and bargaining units should begin contract talks this summer, he says.

A Delphi spokesman said management was traveling and unable to comment at press time.

“The company is in a position moneywise where we feel we’ll be able to come back with a good contract for our people,” says Edward Salus, the newly elected president of 717. “Right now, the orders are getting bigger, but they’re not hiring any more.”

Now is the time to work constructively with the company to craft a labor pact that benefits everyone, he says. “The auto industry is on its way up right now. GM is making record profits.”

The union was established as the IUE-CIO in 1949 at the CIO’s Eleventh Constitutional Convention in Cleveland, according to the IUE-CWA’s website. In three years, membership grew from zero to more than 300,000. By the mid-1950s, the union had negotiated contracts with GM, General Electric and Westinghouse.

Among those GM plants organized was the Packard Electric Co., which the automaker purchased in 1932.

By the 1980s, GM’s Packard Electric division had become the industry’s leading producer of wire harnesses and electrical components. In 1995, it became part of GM subsidiary Delphi Automotive Systems. At its peak, Delphi Packard employed 13,000 hourly workers at its sprawling campus along North River Road and Larchmont Avenue in Warren. In 1999, GM consolidated Delphi operations into a single global company based in Troy, Mich., before spinning off the entity later that year.

The company’s North American operations filed Chapter 11 in October 2005, reorganized and emerged from bankruptcy protection in October 2009.

Today, the local operations are part of Delphi Automotive PLC, based in Gillingham, England, although most of its executive team remains in Troy. Membership in Local 717 has dwindled to about 660, these employees spread throughout four plants – three incorporated into a single remaining building on North River Road, and another plastics connector manufacturing plant in Vienna Township.

The complex in Warren is less than half the physical size it once was. The middle section of the building was razed, while a former 800,000-square-foot manufacturing plant is used by B.J. Alan Co. as a fireworks warehouse and distribution hub (See story page 38).

“Delphi’s story is the story of corporate restructuring and the impact on people and the community,” observes John Russo, former coordinator of the Center for Working Class Studies at Youngstown State University and now a visiting research fellow at the Metropolitan Institute at Virginia Tech in Alexandria.

Packard Electric’s operations once employed more than 14,500 people including salaried personnel, Russo says. Beginning in the late 1970s, Delphi began to shift some production to Mexico as the auto industry became more reliant on electronic components. By the mid-1990s, the company accelerated investment in the maquiladora sector, a free-trade zone in Ciudad Juarez where workers were paid far less than hourly employees in the United States.

At the time, company officials boasted that Delphi’s Mexico operations would help preserve higher paying jobs in Warren, emphasizing the Mexican operations would be reserved for less-skilled labor.

As the company became more global and wages in the maquiladora sector rose, it turned to Asia for even less expensive labor, especially China. “At the time they were going through bankruptcy, they were building a $350 million R&D center in Shanghai,” Russo says.

In the meantime, workers in the Mahoning Valley were forced to make concessions that, on the downside, led to a three-tiered wage system for production employees, Russo says.

Lutz, with Delphi 21 years, says Local 717’s membership took a hit because of the threefold impact of buyouts, retirements and those members eligible to move to General Motors Corp. “We lost about 300 who went to GM,” he says. There were 3,800 members of Local 717 on the eve of Delphi’s bankruptcy.

The shop chairman says Delphi’s local operations continue to turn out product more efficiently than ever. Plant 7, formerly in Rootstown, was integrated into Plant 11 in Warren and manufactures plastic resin used mostly as feedstock for Plant 47, which manufactures millions of small plastic connectors, Lutz adds.

“Those lines are designed to run 24 million pounds of product per year, and the last two years we’ve made over 30 million pounds per year,” he says of Plant 7. “They’re splitting at the seams with work.”

So are plants 47, 10 and 11, Lutz adds. Plant 47 is “the most efficient plastics-molding plant in the world,” he says, while Plant 11 serves as a metals-stamping operation.

Plant 10 manufactures cable used in automobile harnesses, and Lutz says that the operation is more technologically advanced than ever. “In my 21 years, I’d say [during] the first 15 [years] Plant 10 made the same product,” he recalls. “Now, because of the mass amount of media in these electrical cars, there’s a lot of new products in the developmental stage over there. Plant 10 is probably on the surest of footing it’s been on in my entire career.”

Local 717’s Salus says that this year Delphi employees will receive profit-sharing checks – not as generous as those GM recently announced, he emphasizes – but “a good little bonus for them. We don’t know what that number is going to be yet exactly.”

Still, the relationship between the union and Delphi management hasn’t been the same since bankruptcy, Lutz allows. “It’s not the old days where you deliver a product in a timely manner and you get rewarded for that,” he says. “It’s not that type of era anymore, and it makes it difficult on our jobs.”

However, all of the factors are in place to secure a better contract for hourly employees this year, Lutz says. “You have a healthy employer, a decent economy. These are the great times when you should do well at the bargaining table.”

Pictured: Delphi Automotive’s complex in Warren manufactures cables, metal stampings and plastic used for the auto industry. 

Published by The Business Journal, Youngstown, Ohio.