steve c

I woke up this morning to the local Buffalo news saying that Delphi is attempting to persuade workers to take a 2/3 pay cut from an average of around 25/hr to as little as 9/hr in order to avoid bankrupcty. I guess it is a big deal in Buffalo where they account for 2 percent of the workforce. Oddly you just about never hear nor read mention of this debacle elsewhere in the nation.

Since delphi is a major parts supplier to GM one would assume they will feel an impact. While they certainly can find other suppliers what will happen to timely shipments, prices and quality?

As if GM did not have it bad enough already with their unions sucking them dry...


Associated Press
Delphi Chief Executive Officer Robert S. Miller may soon take the company into bankruptcy.
By FRED O. WILLIAMS- News Business Reporter

Delphi Corp. looks increasingly likely to file bankruptcy - possibly before its Oct. 17 deadline sending economic worries throughout the region.
Bankruptcy would end the Lockport plant's status as a preserve for a vanishing blue-collar lifestyle, where assembly workers earn $25 an hour in guaranteed jobs.




http://www.buffalonews.com/editorial...08/1019741.asp

cdelena

Delphi has the same labor problem that GM has, expensive contracts with the UAW that hinder their ability to compete in their market place. I don't doubt there are other problems too, but wages, healthcare, and retirement costs are obviously pulling them under.

Seems like this could further damage GM's ability to operate efficiently right now but long term you know there are plenty of cheaper sources that would like to supply GM.

More likely is that Delphi will get pulled into bankruptcy and then continue to operate as a supplier to GM but maybe less reliable.. or better, I don't know.

"But Delphi also blamed its spinoff agreement with GM for saddling it with high labor costs. Under the agreement, Delphi is required to pay GM wages of $27 an hour to most of its 24,000 UAW-represented workers. That's double the level of competing suppliers, according to Standard & Poor's Ratings Services. Delphi also had to pay full wages and benefits to 4,000 laid-off workers in jobs banks, which cost it $400 million each year."

Penforhire

Delphi is one of the worst-managed companies imaginable.

I've got some concern because one of my top products is sold to Delphi. I can see COD shipments coming. Not like they're going to shut down a bunch of car assembly plants. Their safety stock is something like two months.

GM cannot quickly shift suppliers. It takes months to qualify new parts even under emergency conditions (as when we took over one of our competitors' platforms because of urgent NHSTA safety complaints). I think Delphi will come out of this smelling like a rose (cut their costs but maintain their sales).

Don't buy their stock yet! Stockholders are last in line in bankruptcy. I know someone who thought they'd make a killing on a K-Mart recovery. But one of the bankruptcy conditions was to wipe out all the old stock. Ouch!

rai

$27/hr comes out to $56K/year not bad for non-college graduate. Could live like a king in Buffalo. Put on top another $25K in bennies (I'd guess). Anyone feeling too sorry for the UAW workers?

Could make the same products in Mexico for 1/10th the cost, anyone wonder why manufacturing if moving off shore?

UAW aren't the only problem, with GM, but IMO they are the biggest problem. They'd rather kill GM than take a bennie cut. As in they'd cut off their nose to spite their face.

steven975

well if the company moves into bankruptcy the UAW workers will have ZERO clout. it will all be decided by courts.

basically, the UAW is getting a "last chance offer" while they still have clout. if they say no, it may be to their detriment as bankruptcy courts tend to treat those unwilling to negotiate much worse.

bottom line: Take $10-12/hour now or take $8 and no pension from the bankruptcy judge.

switchcars

Couldn't GM then potentially buy out Delphi at a ridiculous PPS once they go into bankruptcy? That could potentially help GM..I know that's happened before with some of their suppliers.

Penforhire

We've talked about it at work and the consensus is GM wouldn't touch Delphi with a 10 foot pole. They were deliriously happy to dump them and get more freedom for parts sourcing. I think it depends on how sweet they smell after they emerge from banckruptcy but I'm in the minority.

I know I don't feel bad for any UAW workers. Where's Hank? He'll stick up for the union.

steven975

the thing that gets me is that the UAW members with any clout all have tenure and know full well that GM and other companies will go belly up or will have its UAW contracts voided eventually. They know it probably won't be until after they retire so they don't care. Also, they are the last to get laid off, too.

It is the 30-something with the family that will be really screwed over here. Then again, it is hard to feel too sorry for them because they are being paid a wage that far exceeds their economic worth.

Slithr

Saw something this morning that Delphi is asking GM for $6 billion to help keep them out of bankruptcy. Another guy thought that Delphi going into bankruptcy could cost GM as much as $10 billion, but I didn't have a chance to hear the cause/effect on that assertion.

If I'm GM, I probably don't give them the money. It sounds like all that would do is postpone the inevitable.

steven975

I think GM is next in line to cover any defaulted pension obligations as a condition of the spinoff. So, yes, GM could very well have to spend a large amount of cash for this.