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Detroit emergency manager terminates two union contracts

Detroit's emergency financial manager Kevyn Orr talks to members of the media outside the Detroit Newspapers building about the report he de
Detroit's emergency financial manager Kevyn Orr talks to members of the media outside the Detroit Newspapers building about the report he de

By Nick Carey

(Reuters) - As part of ongoing efforts to fix Detroit's fiscal crisis, emergency manager Kevyn Orr has terminated collective bargaining agreements with two of the more than 40 unions representing city workers, a spokesman said on Thursday.

But Orr also signaled a willingness to bargain with unions that could be seen as a peace offering for organized labor.

The letters, sent out on June 25, provided notice that contracts with the American Federation of State, County and Municipal Employees and the Detroit Police Lieutenants and Sergeants Association would be terminated on July 6.

In a statement, Orr's spokesman Bill Nowling noted that both union contracts were nearing their end date.

"It is possible new terms could be issued in the future as part of the city's restructuring efforts," he said.

Michigan's Republican Governor Rick Snyder appointed Orr in March to tackle the financial mess facing a city whose population has fallen 25 percent over the past decade and which at 700,000 is just over a third of its peak of more than half a century ago.

On June 14, Orr presented a proposal to creditors for dealing with the city's outstanding debt of around $18.5 billion that amounted to pennies on the dollar and defaulted on a $39.7 million payment on certificates of participation.

John Beck, a professor of labor relations at Michigan State University, said that terminating the contracts was necessary if Orr wanted to amend them because under U.S. labor law if no talks take place or a termination notice is not provided, a labor contract is automatically extended for another year.

"He might have been worried that the unions would let this slide through for another year to keep their pay and benefits untouched," Beck said.

He added, though, that Orr had signaled a willingness to bargain.

"That is kind of an olive branch and it shows he would like to talk before he dictates terms," Beck said. "These people are important to the fabric of the city and you want them on your side for years to come if you want to succeed."

Neither union responded immediately to a request for comment.

(Reporting by Nick Carey; Editing by James Dalgleish)

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