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Purveyor Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-09-05 06:34 PM
Original message
Delphi Bankruptcy Could Mean A New Era For Auto Industry, Unions
Delphi Corp.'s bankruptcy could change the face of the U.S. auto industry, ratcheting up the pressure to produce cheaper auto parts overseas and forcing unprecedented cuts in union wages and benefits, industry analysts and autoworkers said Sunday.

Delphi, the largest U.S. auto supplier, filed for bankruptcy Saturday and is expected to slash jobs and wages and close many of its 31 U.S. plants as part of its reorganization. General Motors Corp., Delphi's largest customer and former parent, said it might have to assume up to $11 billion in retirement benefits for Delphi's union-represented employees.

But the ripple effects won't end there. Delphi has 500 suppliers of its own who are waiting to see what kind of labor agreement Delphi negotiates with the United Auto Workers. Once a leaner Delphi emerges from bankruptcy, its suppliers could face added pressure to lower their own costs through wage cuts or increased use of overseas labor.

"There's a great deal of concern among auto suppliers about whether they can remain profitable or survive with union contracts," said Jim Gillette, a supplier analyst with CSM Worldwide. "If Delphi's willing to force renegotiation through a bankruptcy filing, I suspect other suppliers would do the same."

-SNIP-


http://www.freep.com/news/statewire/sw122429_20051009.h...
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bahrbearian Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-09-05 06:42 PM
Response to Original message
1. Happy days are here again!
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FrankLee Donating Member (80 posts) Send PM | Profile | Ignore Mon Oct-10-05 04:08 PM
Response to Reply #1
29. Could be the spotlight is on the wrong place
We should be examining the exhorbitant executive salaries instead of trying to pick the workers bones clean. Delphi has 486 executives? Sounds a little top-heavy.

Delphi plans bonuses for executives

CHICAGO (Reuters) - Bankrupt auto parts supplier Delphi Corp. plans to offer executives cash and up to a 10 percent stake in a reorganized Delphi as an incentive to stay, while seeking massive concessions from hourly workers.

Delphi's key employee compensation plan, which requires court approval, also provides for annual cash bonuses to encourage executives to stay through its restructuring, which it plans to complete by mid-2007, Delphi said in court papers.

Under its proposed key employee compensation program, 486 U.S. executives would receive cash bonuses of 30 percent to 250 percent of their salary, totaling $87.9 million, upon Delphi's exit from bankruptcy or sale of the company.

For example, President Rodney O'Neal would get a total cash bonus of $2.75 million, based on a $1.15 million average salary. Some 464 executives could earn bonuses ranging from $50,000 to $475,000, based on salaries of $120,000 to $450,000.

http://news.yahoo.com/s/nm/20051010/bs_nm/autos_delphi_...

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Purveyor Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-09-05 06:58 PM
Response to Original message
2. Text of Granholm statement on Delphi bankruptcy
I am profoundly disturbed by Delphi's decision and what it means for the nearly 15,000 Michigan employees, many of whom have worked for decades for the company based upon the promise that they would have a pension and health care when they retired.

Globalization is ravaging Michigan's manufacturing job base. Delphi's decision will undoubtedly have a ripple effect through Michigan's economy an economy already reeling from outsourcing.

I am angry that this action occurs one day after headlines blared that Delphi employees were being asked to accept brutal, draconian pay cuts while upper management is being offered golden parachutes.

I am equally angry about the lack of support from Washington for the industries that made our country great. There is an apparent indifference in Washington to the human pain that so-called free trade has brought to average, patriotic, hardworking citizens who believe in keeping promises. Moreover, the silence from the federal government is deafening. Washington negotiates these trade agreements and is not offering needed investment in either training our citizens or providing assistance with health care to allow both workers and businesses to be competitive.

If we as a nation can invest billions in infrastructure at home and around the globe, surely we can invest in the human infrastructure our American citizens whose middle class dreams and plans are being rapidly extinguished by race-to-the-bottom global competition.

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bahrbearian Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-09-05 07:08 PM
Response to Reply #2
3.  It's only the beginning.
Most company's are broken into business units. when they fall the Parents will fall , and there go the pensions.
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Sgent Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-09-05 07:34 PM
Response to Original message
4. I confused...
Why do the japenese (who are our major competition), and who have as high of cost of labor as we do, have an advantage.

The banruptcy of the big 3 was seen 25 years ago in their failure to live up to their competition, and the way they handled customers.

Is this a surprise or unexpected? There have been decades to correct or fix the problem.

Note -- I agree about the corporate bouns/pension thing needs to be examined, but I don't see how that would have made a difference in the long run.
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papau Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-09-05 07:45 PM
Response to Reply #4
5. Japanese Management overhead is 1/3rd ours as CEO salaries are 10%
of ours -

but to pay those CEO salaries and other management costs we must use labor paid 30% less than in Japan.

Shareholders who think they are getting "productivity improvements" will be sad when their stocks crash.
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jbnow Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 01:26 AM
Response to Reply #5
11. What makes up overhead?
Why/how is theirs lower?

You gave the percentages, do you know what the usual CEO salary is here? I'm assuming it is very high and that 10% is still a very decent wage.

That's not the main issue of this thread but I wondered. It sounds like many countries, how to put it?...are so much saner then we are.

I don't even know what to say about what is happening to jobs in America, not just in this industry. Or about what is happening to America itself.
We are eating ourselves with greed.
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papau Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 07:30 AM
Response to Reply #11
15. true - other countries are saner with less paid hired management greed
You will find the salary of the head of Toyotta an interesting contrast to the salary of the head of GM.

The game in the US is the use of Salary Consultants to the board that give the "average salary" for CEO's of similiar companies, with the Board always saying their CEO is above average and deserves pay at the 75% mark.

If averyone gets a pay raise to the 75% mark, next years salary average is quite a bit above the 75% mark dollars of this year which is what the Board agreed to pay.

So it it is time for another raise - for everybody!

And the resulting raises are 25 to 50% per year for CEO's.

And you hire to replace a CEO that has failed mostly or only those that have already been CEO's and are now available - meaning previously failed CEO's. Boards do not like to "fail" a CEO.

And Boards overtime replace Board Members that retire with folks suggested by the CEO - meaning friends of the CEO.

Hired paid management has a good deal in the US, eh?

:-)
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section321 Donating Member (632 posts) Send PM | Profile | Ignore Sun Oct-09-05 07:49 PM
Response to Reply #4
6. The Japanese Big Three also have a timing advantage...
Pensions and benefits are cripling the Big Three. One prominent advantage comes from the fact that the Japanese have only been building cars in the US for a little over 20 years (Honda America Mfg in Ohio started operations in 1983). This means the Japanese auto plants in the US don't yet have the level of retirees that the Big Three have (who have been building cars in the US for almost 100 years).

For the US based Japanese auto plants, the new wave of retirees is a new problem they haven't had to deal with before.

That isn't the only difference, but it is a significant one. Alsom GM & Ford have crappy fit and finish. :-)
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KoKo Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-09-05 07:57 PM
Response to Original message
7. Notice how the discussion is about "Union Busting" and not CEO Corruption
Edited on Sun Oct-09-05 07:59 PM by KoKo01
gong back to 1999 and when General Motors sold them off as a "Boondoggle to their OWN CEO's and Shareholders...trying to stave off the inevitable demise of the BIG SUV Push out for Bush Tax Credits for Hummers and the 6,000 and over lb. vehicles so that those "small business enterepreneurs (that Bush just loves) could do their Bubble Real Estate Business in comfort..getting breaks out of ordinary Americans Pockets.

The Rooster has come home to Roost. How many more barnyard animals can the Bush Crime Regime "pull out of hats" in their HUGE EFFORT to convince the CNBC/Larry Kudlow Crowd that neither "Houston has a Problem.nor does America Has a Problem" Everything is just great in this "STRONG GROWTH ECONOMY." AMERICA CAN SURVIVE IT ALL. :eyes:

And it's not about Union members gouging...it's about an "eye for an eye and the whole world goes blind." Or, "Capitalism in it's DEATH THROES." Whatever.... :-(
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Purveyor Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-09-05 08:14 PM
Response to Reply #7
8. I had to laugh at Bob Brinker this afternoon...
Telling his audience to be prepared for the announcement of the inflation rate.

He said, pay no attention to the rate published but look to the "core rate" that excludes the uptick in energy costs.

Of course "no one" uses energy so it is excluded from the "core rate".../sarcasm off

Brinker had the same type comments on the weekly "jobless claims" due out Thursday AM... IIRC he hinted at those being an aberration, also.

"Pay no attention to that man behind the curtain"!!!
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nolabels Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 04:07 AM
Response to Reply #7
12. The corporations and the feds neutered most unions long ago
The vast majority of large unions are mostly subservient to corporations and get a nose bleed every time one of the hosts makes a move. The spin-off of Delphi by GM was a calculated move from long ago.

Delphi's troubles have deep roots
Supplier hoped to 'outrun' legacy costs with output

By Christine Tierney / The Detroit News
When General Motors Corp. spun off its auto parts business six years ago, Delphi Corp.'s prospects seemed unlimited: It was the world's largest auto parts maker, its top clients were generating huge profits selling trucks and SUVs, and it was raking in orders from fast-growing foreign automakers.

But on Saturday, Delphi became the troubled U.S. auto industry's biggest casualty to date, when under new CEO Robert S. "Steve" Miller, it filed for Chapter 11 bankruptcy protection.

Despite its promising beginnings, Delphi was dragged under by GM's falling U.S. market share and vehicle output and by the same inherited legacy costs that threaten to drive its former parent over the edge.

"We got a tremendous blessing and a tremendous curse at the time of the spin-off," Miller told The Detroit News in an interview Saturday. "The tremendous blessing was all of the technology and capability that came with this company. On the other hand, we also received the OE (automaker's) labor contract package, which is wildly uncompetitive with any other automotive supplier," he said.

Delphi was bound by the contract with the United Auto Workers to pay far more than the going rate at most suppliers.
(snip)
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samplegirl Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 12:25 AM
Response to Original message
9. this pretty much puts us here in N.E. ohio on the map
as a ghost town quickly. While the rethugs will scarf up on whatever
treasures we will have to sell on ebay.
Sad................sad way to sad. Almost everyone on my street is
employed at Delphi
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gulfcoastliberal Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 12:37 AM
Response to Original message
10. "Imports" manufactured in US, "domestic" cars made in Mexico
Hyundai, Nissan, Toyota, BMW, etc are made in US plants by US workers. It's likely if you drive a Camry it was made by Americans. Meanwhile, the freepers in their 3 MPG Saudi-patriotmobiles Hummers are made in Chixauca by Mexicans making .30 per hour. It's so fucking ridiculous.
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bleedingheart Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 05:15 AM
Response to Original message
13. who is going to buy the cars when no one is paid well?
that is the one thing the corporate morons forget....
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Delphinus Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 07:06 AM
Response to Reply #13
14. That's been my question for years,
and I've yet to have a response that sat right with me.

I asked a smiliar question about the relocation of the poor after Charley in Punta Gorda. The rich come in, buy up the land, turn it into huge profits, and the poor have nowhere to go. But who are the rich going to get to do their slave work for them? It's not going to be the rich.
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raccoon Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 09:10 AM
Response to Reply #14
18. My question for years, too nt
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No Exit Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 07:57 AM
Response to Reply #13
16. Maybe Bush can propose a Medicare "Transportation for Seniors" benefit
You know, like the "prescription drug benefit"--the one that pumps tons of money into pharmaceutical companies' coffers?
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leesa Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 08:06 AM
Response to Original message
17. Yippee! Will the short-sighted corporate whores realize no one will be
able to keep our consumer society afloat? No money, no buy.
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dogfacedboy Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 09:27 AM
Response to Original message
19. There you go...send it overseas and F#@k more AMERICANS.
The first thing they ALWAYS do is blame their problems on Unions. The Union contracts were in place. These obligations must be met along with their other obligations. Bad business practices are what lead to these situations.
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robcon Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 09:31 AM
Response to Original message
20. Manufacturing jobs are going, going, gone.
Yet the economy is doing fine. The biggest problem we face is the poor education system in the U.S. Manufacturing jobs, which took many high school dropouts into the middle class, have vanished. There is no need for so many high school dropouts, yet only about 40% of hispanic youth graduate from high school!!

A disaster in the making.
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Patiod Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 12:44 PM
Response to Reply #20
21. Read Robert Reich's "The Work of Nations"
Over 10 years old, but the ideas remain true.

The whole book discusses what you are saying - what's going to happen to those who aren't "college material"
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borlis Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 01:22 PM
Response to Original message
22. My hubby works for one of Delphi's suppliers.
He told me this morning that Delphi owes his company over $3 million right now. He is desperately trying to get out of this industry with no luck yet. He has sent out over 200 resumes this year. I think he had 3 interviews. They all tell him the same thing: You make too much money. They want his 20 years experience, but want to cut his salary by almost 40%!! I just don't know what we are going to do if he loses his job over this. :scared:
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IndianaGreen Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 01:28 PM
Response to Original message
23. A Socialist government would re-industrialize America
Think of all the steel we need to rebuilt our crumbling infrastructure alone!

What we need is a government that puts people before profits. No more Clintonian economics that gave us NAFTA, or Bush's CAFTA.
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VegasWolf Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 03:09 PM
Response to Original message
24. Too bad it won't trigger a new era over excessive US exec's salaries! nt
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BeatleBoot Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 03:25 PM
Response to Original message
25. Worries about GM rise after Delphi bankruptcy
http://www.msnbc.msn.com/id/9651172 /

Worries about GM rise after Delphi bankruptcy

One brokerage says risk of automaker filing for bankruptcy now heightened

DETROIT - General Motors Corp. shares fell sharply Monday on worries about heightened risks for the worlds largest automaker after auto parts maker Delphi Corp. filed for bankruptcy over the weekend.

Delphi is GMs largest supplier, and the automaker warned that it faced an increased risk of costly supply disruptions after Delphi filed for Chapter 11 protection in U.S. Bankruptcy Court in New York on Saturday.

One brokerage said the Delphi bankruptcy increased the chances that GM might take the same step, dealers said.

Delphi bonds were quoted 6 percentage points lower in over-the-counter dealings, a trader said, sending ripples through the debt markets.

<more at link>

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INdemo Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 03:26 PM
Response to Reply #25
26. I have no doubt
.that Delphi and GM are perhaps struggling but..Could their objective be to force the UAW to make strong concessions,and their goal being to cut healthcare and pension benefits significantly and then rise again after their goal is accomplished?
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cassiepriam Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 04:40 PM
Response to Reply #26
31. yes of course, that is a major goal. Dump pension, healthcare, wages.
The fat cats then pocket as much of the savings as possible. The con game never stops does it?
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sam sarrha Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 03:26 PM
Response to Reply #25
27. but they gave the customer what they wanted..What Happened..??
:rofl: ..this is a sign for a Rampaging Recession..
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IndianaGreen Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 03:26 PM
Response to Reply #27
28. The workers are not responsible for the GM product line
They merely manufactured the gas-guzzling and cheaply put products that the GM Board and managers thought would make their Income Statement more attractive to the investor class.

Corporations can file for bankruptcy, their corporate board and officers can get fat bonuses even when they fail. It is the workers who end up being the victims!
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-10-05 04:32 PM
Response to Original message
30. They Want To Cut Wages 60%
No mention of losing any hierarchy, though. So much for the economy.
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