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Delphi, the worlds largest Automotive parts supplier is demanding massive cuts from its UAW workforce or threatening to file for bankruptcy.  With 185,000 employees worldwide, Delphi has targeted its 24,000 UAW workers, demanding pay cuts of 60+%, benefit cuts of 77% and the right to close any plant any time it wishes.  

CEO,  Robert S. (Steve) Miller, of Federal Mogul and Bethlehem Steel bankruptcies fame, told white collar worker to stay focused and do their job.  The consensus is that Miller will march Delphi into bankruptcy regardless of UAW actions in order to shed pension obligations which are underfunded by $14.5 Billion and other debt of about $6 Bilion.  For Miller this is Standard Operating Procedure.  Expect Delphi file Chapter 11 next week.

more below

Even if the 24,000 UAW workers give in to the demands of Delphi, half of them will lose their jobs anyway as many of the Delphi plants will be closed and the worked shipped overseas.  The hardest hit state will be Michigan, of course.  Currently home to 14,000 Delphi UAW Employees, I'm sure we'll lose at least half of those jobs, then the reductions in pay, etc. will have the effect of a 11,000 worker layoff.  No to mention the trickle down effect at all the local suppliers to Delphi.

But of course, Michgan was a "Blue" State so nobody will pay much attention and we'll hear the usual excuses that UAW workers are inefficient, unproductive and deserve their fate.  Welcome to the 21st Century and Visteon is soon to follow.

Detroit News Article

Originally posted to BTower on Fri Oct 07, 2005 at 05:38 AM PDT.

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Comment Preferences

  •  It's the latest scheme (none)
     All thanks to United Airlines and the Bush Administration.

    I tell you there is a fire. They have this day set a blazing torch to the temple of constitutional liberty and, please God, we shall have no more peace forever.

    by Anderson Republican on Fri Oct 07, 2005 at 05:36:14 AM PDT

  •  This morning on WDET (none)
    I heard that workers could go from making $27/hour to $10/hour. They know workers won't go for this.

    "We must all hang together or assuredly we will all hang seperately." - Ben Franklin

    by RandyMI on Fri Oct 07, 2005 at 05:42:54 AM PDT

    •  Its a smokescreen (4.00)
      this demand is really just a smokescreen to justify to the bankruptcy judge at a later point that all efforts were tried to negotiate with the union, but failed.  Thus justifying elimination of the union contract (a la Northwest).  Inaddition, it allows management to blame the Union for the bankruptcy thus keeping at least some of its credibility with remaining workers and markets.  Nobody really expects the Union to bend over and take this, nor does it really matter if they do.
    •  The workers will go from making $27 an hr.,,,. (none)
      to being unemployed.
  •  PBGC (none)
    Does anyone know anything about the Pension Benifit Guaranty Corporation?  The only thing I could find (or understand) was that it was a federal corporation that was created from the 1974 Employee Retirement Income Security Act.  I think it covers underfunded pension plans for corporations?  Wouldn't this help in this situation?  Like I said, I don't really understand this but I was hoping someone else did.

    "I remember when the answer seemed so clear. We had never lived without or tasted fear." The Monkees

    by kisler1224 on Fri Oct 07, 2005 at 05:59:08 AM PDT

    •  PBGC (none)
      is essentially a Governmant Guaranteed Pension Insurance fund.  Corporations which have covered pensions pay a premium into the PBGC, which then will cover the pension obligations of the corporation if they default.  Generally the PBGC only covers about 40% of the value of the payments however.  Currently the PBGC is underfunded by some 20+Billion in assets, by the end of the month it will be much worse.  United Airlines was the most recent major default, with some 24B in obligations and 14B in assets.  
    •  The insurance plan can't pay for all the defaults. (none)
      If enough companies dump their pensions the fund will run out. It's made to cover the bankruptcy of one or two companies not whole industries. Executive compensation and pensions need to be tied to the same plans as their employees. If the workers go broke the executives should too. These fuckers at the top will pauperize their employees and then give themselves a huge bonus.
    •  Google PBGC S&L crisis (none)
      And/ or go here or here

      Federal law limits annual pension payments for plans canceled in 2005 to $45,613 for people who retire at age 65.

      ====

      Although the Pension Benefit Guaranty Corporation is a government
      agency, its work is financed entirely by companies, not general tax
      revenues. Companies pay $19 per person covered each year, or more if a
      pension fund is underfunded. The basic rate has not changed since 1991.

      That means that if the agency's troubles worsen, businesses will be
      asked to pay higher premiums, put more cash into their own pension plans
      or both. The agency is also considering a new way of assessing premiums,
      making the companies with the weakest pension funds pay the most.

      http://archives.econ.utah.edu/archives/a-list/2003w03/msg00159.htm

  •  Last week automakers (none)
    announced they were increasing their SUV production by 26% before 2010. They did this despite a huge drop in SUV sales. This is, of course, for the domestic market in US/Canada.

    At the same time Toyota, Honda, Nissan and the other foreign companies are concentrating on making hybrids and fuel effecient cars as their major initiaties. Which group is the most forward thinking?

    The same day the September sales figures came out and the big three all had double diget drops in sales.

    If their employees want to secure their jobs, they should start demanding reality based planning.

    •  Actually (none)
      I'm not sure where you saw that, but the Big 3 are cutting SUV production.  Especially full size SUV's.  Ford announced last week that it will be increasing hybrid production through 2010, GM has hybrids coming on line next summer.  The big 3 are shifting the "SUV"'s they produce from the truck based Expeditions, Explorers, Yukons etc.  to car based SUV's such as the Escape.  Ford did announce a increase in Hybrid Escape production, perhaps this was the source of the confusion.

      Nissan, Toyota, Honda, KIA, Hyundai are increasing SUV production, becuase the profit margins are significantly higher than cars.

      No offense is intended, but this is part of the problem.  The mythology surrounding the auto companies is not based in facts, just long held opinions.

      •  The story I read came from NBC and Newsweek (none)
        It's date October 10th. Here's the link. It's called "Hybrid Nation? Nope" But I was mistaken, it's not 26% by 2010, it was 24%.

        ""By 2010, the number of SUVs on the market will increase 24 percent to 109 models, while just 44 different hybrids will be offered by then, according to auto researcher J.D. Power.""

        http://www.msnbc.msn.com/id/9556248/site/newsweek/

        •  One more thing.. (none)
          note the comments that claim GM is working to make their engine "look" smaller and the industry prediction that hybrids won't catch on unless we're completly out of fuel.
          •  Ok (none)
            Where to start with that article.  It refers to number of models on the market from all automakers, glosses over Ford's hybrid program, briefly mentions   Toyota building a full size truck plant, examines some of GM's 06 & 07 models, which have been in planning since 03, then infers that the "Detroit" automakers are responsible for the rise in model numbers.

            The meat of it is that people are buying SUV's.  Even at toyota, everyone's hero, hybrids only represent 5% of sales, trucks 29%.  The Big 3 are moving to smaller car based SUV's, the transplants are building bigger.

            The comment on "running out of fuel" and hybrids was not an industry representative, it was an independent marketing consultant.  

             

            •  Bad for Unions (none)

              The article refers to increases in both the number of models and market share of SUV sales which I would read as increasing SUV production. Presumably they are not increasing the number of models in order to sell less.

              All of the articles I have seen discussing the non-importance of hybrids focus on market share and avoid any discussion on the self fulfilling prophecy of the projections, i.e. we are not going to build hybrids because no one bought them in the past.

              Either way, it doesn't look like a lot of forward thinking on the point of auto makers which is bad for unions and workers. The take away from this for unions is that they will be victims of poor management at the automakers. It doesn't matter how good your union is if you work for the last buggy whip manufacturer.

              An empty limosine pulled up and George W. Bush got out.

              by beerm on Fri Oct 07, 2005 at 08:00:41 AM PDT

              [ Parent ]

              •  Somewhat Misleading (none)
                But still true.  In Big 3 Production planning, they are reducing production capacity of large and mid sized SUV's.  They will be building more production capacity of compact SUV's.  Ultimately they will build what customers demand.  The transplants are increasing capacity in large vehicles and compact SUV's so any net gain in capacity is coming from that direction.  

                The rational decision to reduce capacity on the part of the Big3 in larger SUV's will negatively impact the Unionized workforce of those facilities, but the shift from larger to smaller has to happen and should in the long run protect the remaining unionized employees.  Currently the Big 3 are over capacity in cars (except for some hot sellers), so many of the compact SUV's which are based on the car platforms will be built in the "car" plants.    

    •  GM sells 20% Fuji Heavy Industry (none)
      To... wait for it...Toyota, who becomes largest stakeholder.

      The good news is that  Fuji Heavy is Subaru and Toyota can now marry Subaru's All Wheel DriveTechnology(which GM let stagnate) with 'Yota's Hybrid Tech(which GM ignored) making the next gen car that Ilook to acquire.

      •  BTW- companies not spun out as viable bizness (none)
        GM bought its stake in Fuji Heavy in 2000 for about $1.4 billion

        And sold it for ...$746 million

         http://www.bloomberg.com/apps/news?pid=10000087&sid=aPtcpzEAkWiY&refer=top_world_news

        ``It's surprising how fast GM is selling off the family silver,'' said Graeme Maxton, a director of the Economist Intelligence Unit in Hong Kong. ``It rings alarm bells.''

        "These companies (Delphi Visteon) were not spun out as viable businesses,"...

        Now some of the costs that the auto makers tried to move off their books are coming right back to them, making the whole spin-off exercise something of a charade.

        October 13/14 are going to be  very busy days in the US.  Will the PO be open on Sunday?

        •  To a large extent (none)
          Delphi and Visteon were not spunn off as viable businesses.  I don't believe it was intentional, but more inertial.  Ford has "bought" back some of the Visteon plants which made products exclusively for Ford.  They had to, nobody else in the market would or could make those parts for the prices paid by Ford.  GM had similar issues.
        •  A great move on GM/Ford's part. (none)

          Basically, they were getting undercut by foreign car companies (Primarily due to their own stupidity, but I digress.)  So what they did is they spun off their supply branch, and signed long term, low cost contracts with those companies.  Thus, the main car company got some cash, low cost parts, and were able to stay competitive.


          Meanwhile, the subsidiary, hit by higher energy and raw materials parts, plus locked into low profit contracts, goes belly up.  However, they've already been spun off, so the workers can't get money from GM to pay their pensions.  So GM and Ford get huge write-offs and the employees are left holding the bill.


          Not that it'll save them, they still seem to be incapable of building the vehicles the public desires.

          •  But that's my point (none)
            Delphi and Visteon have NOT been spun off, except in the minds of Wall St.

            They're joined at the hip.  Delphi is demanding $6 B from GM.  Where does Delphi get off doing that?

            I'm telling you right now GM/Ford are going to be on the hook for Delphi/Visteon bankruptcies.

            And can a bankrupt Corps still be in the DJIA?

            •  They've been spun off in the legal sense. (none)

              "Delphi representatives have clearly stated that regardless of what the UAW agrees to, GM must provide billions of dollars in financial support or Delphi will be forced to file Chapter 11," the memo said.


              They want GM to pay to keep them open, to avoid the trouble of finding another parts supplier.  They're using their leverage as main supplier to attempt to wrangle money out of GM.  They don't have any legal entitlement to the cash.


              I'm telling you right now GM/Ford are going to be on the hook for Delphi/Visteon bankruptcies.


              I disagree.  If anything, look for them to use the excuse of their main supplier going under to ask for government hand outs and/or try to use it as leverage for more union concessions.  Once a division has been spun off as a legally separate corporation, the original company has washed its hands of the matter.

              •  GM is legally on the hook (none)
                for Delphi Retiree Medical if Delphi defaults.  As far as I know, that is GM's only legal obligation.  They are dependent on Delphi as a the only supplier for many components so who knows.
    •  This is the real reason... (none)
      Americans are great designers but the corporations always put the present quarter's stock performance over the importance of everything else.

      Design is expensive. Bad design is even more expensive in the long run. Japan learned that a long time ago and so did Europe.

      My current car is a Honda Element, one of the best auto designs to come along in years. I flat out love this car and I see these things everywhere so I know I am not the only one who is a freak over this car. It is a 4WD SUV with great gas mileage and roomy to the extreme. GM/Ford has nothing in its class.

      The primary assembly location is Ohio for this car and it is very well assembled. The problem is NOT with the American worker and their craftsmanship, but it is with the GM/Ford corporate brass that refuses to move forward until it their bottom line is threatened with absolute and unforgiving doom. Then they move a tad.

      Another example of amazing design and manufacturing is Porsche. Damn near all parts of the car are recyclable and made in the most envorinmentally friendly way possible. Even the amount of maintenance (oil changes, etc) are only recommended every 20,000 miles or 2 years. And all of this for a sports car. What would happen if this kind of attention to detail spilled over to the Ford Taurus?

      Exactly what moron at GM is increasing SUV production when sales are down? And why isn't he unemployed at this moment?

      With GM and Ford stock now officially considered junk stock by Wall Street, you would think, they might start looking for a clue.

      •  Element? (none)
        My current car is a Honda Element, one of the best auto designs to come along in years. I flat out love this car and I see these things everywhere so I know I am not the only one who is a freak over this car. It is a 4WD SUV with great gas mileage and roomy to the extreme. GM/Ford has nothing in its class.

        Funny, when I looked at the element I saw an ugly car that only held four people with the back seats somewhat inaccessible and didn't get all that great of mileage except compared to SUVs and couldn't fit a sheet of plywood without it being stacked at a diagonal and hanging out the back.  

        •  Ugliest piece of shit on the road (none)
          I always pass them so I don't have to look at them.

          "Lash those conservatives and traitors with the pen of gall and wormwood -- let them feel -- no temporising!" -- Andrew Jackson to Francis Preston Blair, 1837

          by Ivan on Fri Oct 07, 2005 at 08:19:39 AM PDT

          [ Parent ]

  •  Michigan = Michississippi (none)

    "We must all hang together or assuredly we will all hang seperately." - Ben Franklin

    by RandyMI on Fri Oct 07, 2005 at 06:19:14 AM PDT

    •  Yep (none)
      a return to the "Will the last one out please turn off the lights" billboards around town.
    •  There's two ways to go (none)
      We can try for the high-tech, high wage route pursued by Massachusetts -- which requires a higher tax burden for infrastructure and education.  Or, we can opt for Mississippi: lower taxes, lower services and lower wages until we're Mississippi North (which itself is but Mexico North).  Unfortunately, we all know which way we're currently heading.  As a lifelong Michigander, this both saddens and angers me.  And I have to say, I am currently less than impressed with Granholm's response to the GOP's Mississippification of the mitten.

      As a related aside, in Michigan Lawyer's Weekly, there's two pages of job ads at approximately 10 per page; Massachusetts Lawyer's Weekly has 14 pages of job ads.  Mississippi?  They don't even have the printing press yet.

      •  Michigan is pushing the High Tech High Wage (none)
        Biotech, Engineering etc.. I'm afraid that this'll only help a small portion of the mitten.  But at least for engineering the mitten is already the place to be. Gone are the solid, well paying manufacturing jobs which really provided the growth over the past century.  Mississippi is a mess and the repugs truly want the Mitten to look just like it.  To be honest, with right wing retards in control of the MI house and Senate, I'm not sure how effective Granholm can be.  
  •  I sent your link to Ed Schultz's radio show (none)
    and he's a big union guy. I hope he broadcasts the info from the article and pounds on the elected elite's war on domestic labor and collusion with transnational capital.

    The Moe Sizlak Experience, featuring Homer Simpson.

    by lepermessiah on Fri Oct 07, 2005 at 08:19:10 AM PDT

  •  Thanks (none)

    Thanks for the clarification on SUV production.

    I still question using market share as an indicator of customer demand. The problem as I see it is twofold. Market share is a lagging indicator. It requires validation of what is produced which limits the question of what customers demand to technologies that the automakers have already embraced. It will react to customer demand after the fact. The second problem is that it dampens the reaction to customer demand through a weighted averaging of past customer demand which is, once again, limited by the automakers previous offerings. This artificially limits the growth rate.

    I still do not see forward thinking on the part of the american automakers. The changes in SUV production that you provided point to a retooling of current offerings and not a commitment to develop transportation for the energy environment of the future. I am afraid they are setting themselves up for a repeat of the 1970's.

    I am afraid this doesn't translate into a rosy future for unions. Unions are important because workers really do have a stake in the management of the companies they work for.

    An empty limosine pulled up and George W. Bush got out.

    by beerm on Wed Oct 12, 2005 at 07:53:33 AM PDT

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