Delphi Bankruptcy Filing

[tom.mcinerney]

We have some experience here with contract-procurement/outsourced parts. I think it's about 12 years since the race to outsource component production was merged with the impetus to minimize component cost.

Labor [particularly airlines] hit on the notion that until a corporation was bankrupt , wages should be forced up(??)

Now management is using similarly warped approaches , embracing bankruptcy as a means of simultaneously voiding previously-collectively-bargained wage & benefit agreements , while shifting pension burdens to the government (?!!?)

Article by Danny Hakim , NYTs auto industry key writer:
http://www.nytimes.com/2005/10/09/business/09delphi.html?pagewanted=print
or
http://www.nytimes.com/2005/10/09/business/09delphi.html?pagewanted=all

free access i think thru 10/16/05

Quoted by Ron GEttelfinger:
"Delphi's decision is obviously an extremely bitter pill,"....

[excerpts]--
Delphi wanted workers to accept wages of $10 to $12 an hour, ....
On Friday, in a move that dismayed the union, Delphi sweetened severance packages available to its top 21 executives, a move the company said was necessary to retain its newly assembled management team. Union leaders, however, said it showed a lack of shared sacrifice.
"Once again, we see the disgusting spectacle of the people at the top taking care of themselves at the same time they are demanding extraordinary sacrifices from their hourly workers, engineers, administrative and support staff, midlevel managers and others," Mr. Gettelfinger said.

[rjschoolcraft]

I worked for GM for over 15 years. The UAW represented workers thought that going to work ought to be like going to the country club. I've witnessed lazyness, theft, graft and corruption at all levels of UAW leadership. Always complaining about "management" taking care of themselves while for the last 50 years they've done nothing but suck these corporations dry. I think it's time for some work to be done for the wage that is paid.

Now, I've also witnessed some very hard working, honest and productive UAW represented workers. However, they are the exception rather than the rule from my perspective.

The funny thing is, once the union workers move from the workforce into the union leadership, they behave exactly like the "management" that they so detest. Kind of like the pigs in Orwell's Animal Farm (if any of you have ever read that book).

[TJ]

Ronniejoe is correct to a "T." As a result of this, the demand for foreign parts and labor has gone through through the roof. This, in turn, makes the overall situation worse.

[More Power]

GM is in big trouble... You can read the following Fortune Magazine (http://money.cnn.com/magazines/fortune/fortune_archive/2006/02/20/8369111/index.htm) article to learn more about the problem.

One paragraph, as it relates to the UAW, sums it up this way...

"The truth is that GM is essentially indentured to the UAW because of the union's power to strike. To that bondage, add another: GM's hourly and salaried employees, present and past, essentially own this compnay, a fact we will prove by describing the bank accounts. At the end of 2004, the latest date for which figures are available, GM's pension funds (both inside the U.S. and out) had $100B in assets -- which is wealth belonging to GM's employees, retirees and dependents. To that you can add $19B that GM has put in a dedicated account for retiree health benefits. That makes $119B that GM has banked for its employees. In contrast, the shareholders of GM recently owned their grubby $13B in market value. That is a bizarre, Alice-in-Autoland result from 98 years in which capitalism supposedly reigned."

You gotta read the whole and quite lengthy article to get a sense of the magnitude of the problem GM is facing...

Jim

[D-max Man]

I will probably get myself in trouble here but here I go anyway...

Having grown up in a “Union town” (Flint, MI) and having worked for and still working for a major automotive manufacturer, I have first hand knowledge of the unions. Based upon my experience, I have come to the conclusion that the Union is a "Necessary Evil".

While I do not believe that the unions should be abolished for fear that companies will revert to pre sit-down-strike mentality, I do believe that they have gotten way out of control!

When the unions were started, they could justify their existence and the required dues because they were getting well deserved benefits for their workers. However in the 70's & 80's the unions went crazy with their demands. They had already gotten the workers what they deserved and for fear of a backlash by the workers from having to pay dues for no reason, the union leaders decided to go after more. They bargained for additional, unnecessary benefits that were great for the workers but caused the companies to have to raise their costs.

During the 70's & 80's the companies were afraid of the unions and gave in without much of a fight. This started a downward tumble for many companies while propelling the unions to new heights.

In the late 80's & the 90's many companies started outsourcing as an effort to reduce the labor burdens brought on by the union demands. This caused the unions to go into "Save mode". Now they can justify their dues because they are fighting to keep what they have.

My fear with this Delphi situation is that the unions will loose sight of the "Big picture" in an effort to save what they have now.

If the UAW does indeed strike Delphi as they have threatened, this would most surely cause GM to file for bankruptcy and close many of the very plants that buy the products that Delphi makes. This would only cause a greater hurt to their members - not save what they have!

Not to mention the trickle down effect it will have on all the suppliers and local businesses - stores, restaurants etc… that depend on GM and its workers for their existence.

While I don't like to see anyone have to give up 1/3 or more of their pay, it is better than loosing their job entirely.

Remember Penn Steel?

The unions refused to accept concessions when the company asked for them so they could compete with the Japanese steel companies and this forced Penn steel to close their doors for good. The Unions cried foul and said that they would accept concessions if the company stayed open but it was too late by then.

All I am saying is that I sure hope they think this through very carefully before they go on strike and cause many other UAW members at GM and their suppliers to loose their jobs over this.

[toyboxrv]

Being one in the industry D-Max man would you think the possibility of GM sub contracting out their production to an outside company. A new company could lease existing facilities and hire their own employess. GM could let their UAW contract expire next year and end the high wages, benefits and jobs bank and get their costs in line with other companies manufacturing cars in the US. Wagoner has shown a desire to avoid bankruptcy and keep GM's promise to its former workers and continue their retirement. Home builders design and engineer their product then sub all the work to others and it should be possible for GM as well.

[Dave]

Delphi already does that. They purchase many parts assembled by other companies then put their lable on the part. Spark plugs are just one example of it.

I will also agree with D-max man, Unions got to greedy. I was born and raised in MI, (UAW) country. Grandfather worked for Oldsmobile. My brother works for a car parts plant in Battle Creek. I work for a car parts Plant in TN.

In most manufacturing plants in the US be it car parts, or other manufacturing production line workers start between 10 and 13 dollars an hour. The start pay mainly viaries due to cost of living in the area. Then a production line worker will top out between 15 and 16 an hour. Well below what the Union is demanding for low skilled labor. 15 and hour for low skill work is very good pay. The UAW has driven wages up so high they can not compete.

However even worse then the wages going up so high is the regulations on what each job title can or can not do. This causes the company to have to have way more people than needed to do the job. A production worker can not take out the trash, or sweep the floor. In maintenance in a UAW plant you have to have Welders, Millwrites, electricains, pipe fitters, machinest, die maker, PLC programer, robot programer, Fabricator and so on. These trades guys can not do anything other than thier trade. These are all highly paid workers who spend much of the day doing nothing or waiting for the other guy to finsih so they can do their part.

A non union car parts plant, like I work in if your in maintenance you have to do it all. The pay is with in a dollar an hour of the UAW plant. However I only have 2 maintenance guys on a shift, four shifts. That is only 8 total people. If the UAW was in here I would have to have 8 people per shift to do the maintenance work, that would be 32 people total in maintenace. The overhead would be 75% more just in maintenace alone. At that rate we too would be out of business.

Everything is on a cost per peice. Right now maintenace costs 2.35 per piece we make. If I had union required staffing my maintenance cost per piece would be 9.40 per piece, even if our wages and benifits were identical to UAW that is still a lot of extra money per part. We would be out of business though. I goal is to make 1 dollar per part, the increased maintence costs alone would eliminate all profit.

[D-max Man]

About 20 years ago, John Nesbit wrote a book called Mega Trends. In it he used data collected over the past 50 or so years to predict several things that he felt would happen over the next couple decades. So far almost everything he predicted has happened.

I bring this up because he also predicted that there would only be one (he didn't say who) major automobile manufacturer actually producing cars in the U.S. The others would be manufacturing them outside the US or rebadeging cars made by other companies and selling them as their own.

Looks like this one might actually happen too.

P.S.
He has sense written Mega Trends 2000. It has even more predictions in it. Both are very thick books but worth reading.