Delphi says that the job cuts are the best way to save its business

Delphi, which is Chapter 11 bankruptcy protection, wants the court to grant it the right to annul labour contracts.

Company boss Kevin Butler said that leaving contracts in place and having strikes in 2007 would be "far more devastating" than if it happened now.

Unions said workers would be hit with large pay cuts if the contracts ended.

They also argued that worker representatives would be sidelined as the company planned for its future.

Speeding up

Delphi is a former part of General Motors and is still the carmaker's largest supplier.

However, its earnings have suffered as increased competition and falling demand have eroded profits at GM.

To survive, Delphi said it needed to reduce costs and proposed a plan that would cut 23,000 jobs, close 25 plants and cut benefits for staff and retirees.

It also complained that the unions had been slow to negotiate any form of compromise and as a result needed workers contracts terminated to give it greater freedom to move quickly and restore the business to health.

Unions countered that it was the company that had slowed proceedings.

The current hearing is expected to last until Friday, while a ruling could take months.

Complicating matters is an agreement with GM, in which the former Delphi owner has guaranteed the pensions and benefit obligations of workers should its supplier be unable to meet them.

GM has estimated that the guarantee could cost it between $5.5bn (�3bn) to $12bn.