DELPHI SHOCKER: Plan deepens divide with its unions, GM

[Ming]

DELPHI SHOCKER: Plan deepens divide with its unions, GM
April 1, 2006
BY JASON ROBERSON
FREE PRESS BUSINESS WRITER
www.freep.com

Delphi Corp. chief executive Steve Miller, who had preached the need to bring union labor costs under control, unveiled a drastic restructuring plan Friday that shook the auto industry and set the stage for a tense showdown with the UAW and Delphi's other unions.

The company, in a filing in bankruptcy court in New York, outlined plans to shed 25 of its 33 U.S. plants by January 2008 while cutting 23,000 workers -- including 10,000 in Michigan. Plants in Flint, Adrian, Coopersville, Saginaw and Orion were on the hit list.

Beyond the U.S. hourly jobs Delphi plans to cut, it also targeted another 8,500 salaried jobs worldwide.

Also Friday, Delphi asked bankruptcy Judge Robert Drain for permission to throw out its labor contracts and eliminate retiree medical and life insurance benefits. Delphi also declared that it wanted to rid itself of some unprofitable contracts with General Motors Corp., its largest customer.

Miller said in a statement that Delphi officials were mindful of the impact on workers.

"Yet ultimately, these actions will result in a stronger company," he said.

Miller said he hoped to continue negotiating with the UAW, Delphi's largest union, to reach an agreement on sweeping wage and benefit cuts. Before Friday's action, Delphi had asked for 35% pay cuts in exchange for a $50,000 incentive to each union member -- an offer the UAW rejected.

UAW President Ron Gettelfinger said in a statement Friday that Delphi's restructuring announcement had killed any momentum in the negotiations.

"Indeed, today it appears there is no basis for continuing discussions," he said.

The scope of Delphi's efforts to reinvent itself and shrink its unionized workforce could signal a landmark moment in Detroit's storied labor history and could be devastating for GM if the UAW strikes Delphi.

A strike would reverberate through the industry and cripple GM, the world's largest automaker, by leaving GM short of parts for its assembly operations. During the first 60 days of a strike, GM would burn through $7 billion to $8 billion in cash, analyst John Murphy of Merrill Lynch said in a report to clients Wednesday.

Delphi has been dependent on GM, its former parent company. GM accounted for nearly half of Delphi's $26.9 billion in revenue last year. Delphi has sought GM's help to reduce its workforce, both by subsidizing wages and allowing Delphi workers to take jobs at GM as the automaker scales back its own hourly workforce.

"We disagree with Delphi's approach, but we anticipated that this step might be taken," Rick Wagoner, GM's chairman and chief executive officer, said in a statement, referring to Delphi's motion to cancel contracts. "GM expects Delphi to honor its public commitments to avoid any disruption to GM operations."

Friday's court actions are unlikely to prompt an immediate strike. The bankruptcy judge is expected to take several weeks to consider Delphi's motion, and he likely will push both sides to reach an agreement. In addition, any negotiations and other proceedings could spill into the summer before an outcome is reached.

In the meantime, many Delphi workers are bitter.

Mark Bellamy, 49, who said he has more than 29 years of seniority at Delphi's Flint East plant and plans to retire soon, described Friday's developments as part of an unceasing trend of corporate greed.

"As long as corporate America is unloyal to this country -- they're not loyal to anybody but to their stockholders -- we're going to have these problems, and it's not just going to be the auto industry," he said.

Adding up the losses

Delphi, the nation's largest auto supplier, has never been consistently profitable. GM spun off Delphi in 1999. It lost $4.8 billion in 2004. After losing another $741 million in the first six months of last year, it filed for Chapter 11 bankruptcy protection Oct. 8. From then through Feb. 28, Delphi has lost another $1.5 billion.

Delphi says it is burdened with:

• Restrictive labor contracts that require it to pay far more than its competitors. The company says its 33,100 hourly workers in the United States make $78.63 an hour, a new increased figure it disclosed for the first time Friday. Delphi says that average hourly wage includes benefits such as health care and vacation days and legacy costs, which include retirement health care costs and health costs not covered by workers' compensation.

• A gradual loss of GM's business. Delphi's total revenue from GM fell from $22.3 billion in 1999 to $12.8 billion in 2005. GM's market share also has slipped, which has meant less business for Delphi. The Delphi content -- or the dollar value of Delphi parts in a typical GM vehicle -- has fallen from $3,200 in 1999 to $2,300 in 2005.

More: http://www.freep.com/apps/pbcs.dll/a.../1014/BUSINESS

[LAMRONH]

Chickens Come Home to Roost is my preferred title to this.

Mark Bellamy, 49, who said he has more than 29 years of seniority at Delphi's Flint East plant and plans to retire soon, described Friday's developments as part of an unceasing trend of corporate greed.

As Oliver Hardy once said to Stan Laurel: "Well, it's a fine mess you've gotten us into now!

There is plenty of blame to go around. With the corporation and the union invested in an adversarial vs. a cooperative relationship, it's going to take some serious growing up and waking up to change things.
At this point, unless the UAW shows some grasp of reality, I'm hoping they get broken before they send the US auto industry the way of the US shipbuilding industry and the US steelmaking industry. The Lessons Learned After-Action Brief for those plane crashes has been written, if only the interested parties would read and more importantly understand it.
I am not optimistic that the Unskilled Always-Whiners will understand the lesson of "The Goose That Laid the Golden Egg," instead continuing the active delusion that they are worth more than teachers, cops, firemen, paramedics, counselors, many nurses and military personnel, etc. the list goes on...and that looting a burning palace is a greater benefit to them than attempting to extinguish the fire.
I wonder if McDonald's, Burger King, Wendy's, Arby's, etc. offer the kind of package General Van Winkle and MoFoCo are providing while they remain in business.

[Kennyboy]

How do we know it isn't one of those corny April's jokes?

[free_energy0]

This is good. GM can file bankruptcy and emerge as a new company, with nowhere to go but up.

[chevySSfreak88]

true

[ByTheLake]

Originally Posted by Kennyboy

How do we know it isn't one of those corny April's jokes?

Check out the Detroit Free Press (www.freep.com) ... its this weekend's front page story.

[1G6]

Latest example of why C&G blows ... their whole front page is nothing but cornball April Fool's crap.

[GM-10]

Originally Posted by LAMRONH

As Oliver Hardy once said to Stan Laurel: "Well, it's a fine mess you've gotten us into now!


At this point, unless the UAW shows some grasp of reality, I'm hoping they get broken before they send the US auto industry the way of the US shipbuilding industry and the US steelmaking industry.

I wonder if McDonald's, Burger King, Wendy's, Arby's, etc. offer the kind of package General Van Winkle and MoFoCo are providing while they remain in business.

McDonald's offers a free meal every shift and one federally mandated break 15 minute break.

So that means one could conceivably have a filet-o-fish evry day until they collect their then remaining Social Security pension.

Go get 'em BPO's

[Cortazzo]

Did you think this was going to end any other way? I think their offer is pretty reasonable for a company THAT CAN'T MAKE MONEY! The UAW makes Delphi seem like a neglectful parent, well, it's not Delphi's job to wipe everyone's ass from cradle to grave. Let the senior workers take the retirement bribes, shut down unprofitable operations and sell them to someone without such legacy burdens. Some DCX parts factories were sold to some private company and the workers all kept their jobs, just at a little bit lower wage.

[GM-10]

Why can't these block heads wake up and see this is negotiable...its reality.

They would have better luck tring to convince a stump that its still a tree!!!!

[Havasavana]

I wonder how many new cars are purchased in a year by people who work at McDonalds and Wal-Mart.

[GM-10]

I wonder how many jobs intractable UAW "Workers" have run off.

[Gm786]

The UAW takes too long to negotiate and gives everybody including GM an extremely hard time.

[steverino]

Originally Posted by Havasavana

I wonder how many new cars are purchased in a year by people who work at McDonalds and Wal-Mart.

I wonder how many new GM cars are not purchased by people who are sick & tired of listening to UAW people whine & complain about having to make some adjustments to their lives in order to save their jobs.

[LAMRONH]

Originally Posted by Havasavana

I wonder how many new cars are purchased in a year by people who work at McDonalds and Wal-Mart.

Maybe a new lease occasionally, IF ma, pa, gammy and gampy, uncle ned and aunt emma, and the kids and the neighbors' kids form a...uhh...autobuyers Union!