GM, Delphi Reach Union Pact

The parties sign a memorandum of understanding for key cost cuts.
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General Motors

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and the United Auto Workers union have reached a tentative broad-based labor agreement, Delphi said Friday.

In a short statement, Delphi said the three parties have signed a memorandum of understanding covering site plans, workforce transitions and other "transformational issues." The bankrupt auto-parts maker said it won't provide details of the agreement, which is subject to union ratification and approval by the U.S. bankruptcy court.

"If ratified, we believe this agreement will be a significant milestone in our transformation and a major step towards emergence," said John Sheehan, Delphi's chief restructuring officer.

Delphi is a former unit of GM and remains the auto giant's biggest supplier. The labor negotiations and efforts at cost cuts for Delphi were seen as key for GM as the automaker navigates through a turnaround of its own business.

GM's fortunes are closely tied to Delphi's survival, since its own financial health depends on a steady flow of parts to its manufacturing plants. GM has been a major player throughout the bankruptcy process, shouldering much of the financial burden and helping to broker a deal in the heated negotiations between Delphi and the UAW over salaries and benefits.

Shares of GM recently were down 38 cents, or 1.1%, to $35.58.