Bankrupt auto parts manufacturer Delphi and the unions representing its 33,0000 workers had their first day in court Tuesday, as the U.S. Bankruptcy Court opened its hearing on Delphi's request for permission to terminate its labor contracts with the unions.

Although Delphi says that it would not necessarily exercise the authority to terminate the contracts, preferring to reach a negotiated settlement with the unions, the UAW counter that the unions would effectively be negotiating with a gun to their heads - hardly the sort of scenario that would lead to an equitable settlement.

Encouraging the parties to continue to negotiate in parallel with the hearing, Judge Robert Drain suggested that the judicial process will not be over quickly - the three days originally scheduled to hear arguments from both sides are unlikely to be sufficient to hear all of the 32 witnesses scheduled to appear, and after the hearing is over, the Judge Drain has 30 days to reach his decision.

Meanwhile, the UAW strike vote process is likely to grant union leaders the authority to call a strike against Delphi as early as May 14. No amount of contingency planning will protect General Motors in the event of a shutdown of its largest supplier, and the automaker would be forced to close its doors in a matter of days, with a potentially devastating impact on its recovery plans. No wonder Rick Wagoner, GM's CEO, said Tuesday that helping Delphi and the unions resolve their issues is at the top of GM's to-do list.

[Source: Detroit News]