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Last Updated: Friday, 9 June 2006, 21:22 GMT 22:22 UK
Delphi reaches deal with workers
Delphi HQ
Delphi's labour problems could have far-reaching consequences
Delphi, the bankrupt parts supplier and former unit of US car firm General Motors, has reach an agreement with workers that may put off strike action.

Delphi and unions have agreed a package of early retirements, and cash buyouts if workers give up healthcare benefits.

The company had earlier said it was vital to renegotiate labour contracts if it wanted to survive. Unions had threatened to strike over the plans.

Both sides will now look at whether they can agree on cutting wage costs.

Survival tactics

Last month, Delphi boss Kevin Butler told a bankruptcy court that it would be better for the firm to endure a spate of strikes now, and called on the bankruptcy court to annul its labour contracts.

Delphi has entered Chapter 11 bankruptcy protection as it looks to save its business.

The bankruptcy court has adjourned until August in order to give the firm and workers an opportunity to sort out their differences. The court will need to approve any agreements.

Delphi is still the main supplier to General Motors and any strike would paralyse production.

A strike could close GM's assembly plants within 48 hours and cost the firm billions of dollars, analysts said.

Last month, about 24,000 United Auto Workers union workers at 21 Delphi plants voted for the action by a majority of 95%.

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