Delphi drops the other shoe

Well, after months of threatening, Delphi finally announced it has filed for bankruptcy. It’s almost a relief.

Last week they released a long list of concessions, wage cuts, benefit reductions and give-backs and said that if the union didn’t agree to them what it would be offered by a bankruptcy judge might be even worse.

Well, the UAW must have rejected it out-of-hand, because before the ink was barely dry on the proposal, it was announced they had filed the bankruptcy papers. It seems like they had intended to do that all along.

The media has been all over the place giving it attention in the news. The other night on the way into work, there was a TV news truck parked across the street. What they expected to see, I don’t know. Probably, they just wanted to read the news with a talking head in front of the Delphi

So far, it’s been business as usual in the plant. Still working three shifts of production around the clock. Still offering overtime to employees. Still selling auto parts at less than cost to suppliers…

What is happening is so transparent, I don’t know who they think they are fooling. Hopefully, not the judge in bankruptcy court…

Since the 1980’s – probably before – GM has said it wanted to pay its employees in component divisions a lower wage then they pay to those in the assembly plants. The UAW and other unions wouldn’t stand for that and have kept a standard agreement in place across the entire company and generally, across the entire industry, at least the “Big Three.”

So, the game has become ‘divide and conquer’ and the only way they could do it was if those component plants were no longer part of GM. This is the big reason behind the Delphi spin-off.

So now, after five years of independence, Delphi is going bankrupt. They’ve claimed to be losing money ever since the stock showed it was never going to perform like they said it would at the IPO. They put on a good show at first to get investors, but it started at $17 and has declined steadily ever since. Now they are doing what I’ve always said they would do and blaming it on the workers.

How long do you lose money and not do something? GM ran these plants while paying competitive wages and still made money. Why can’t Delphi? It’s simple. GM controls the price, not Delphi. They asked for reductions in the costs of components across the board from all of their suppliers, while demanding higher quality and shorter delivery times.

Here’s a scenario:

“Thank you for calling Burger King, how may I help you?”

“Hello, I want to order some hamburgers for a group of people. I’m wondering if you can help me.”

“Yes, of course.”

“I need three thousand cheeseburgers. Can you do that?”

“That’s a large order, but we will try.”

“Okay. I need them delivered to my site starting at noon. I’ll need 500 right away and 100 every hour. Can you do that?”

“I think so.”

“And because I’m now your biggest customer, I’m going to set the price. I want a substantial discount and I’ll expect price cuts as we go along.”

“Umm, okay, I’ll have to talk to my manager about that.”

“Oh and quality. I expect top quality. I want you to put on extra people to carefully inspect each piece. Any that don’t meet my standards will be returned and you will have to replace them, even if it is not your fault. And if they are late, you will have to use express shipping at your expense. Is that okay?”

“Click.” Dial tone.

That’s the exact situation GM placed Delphi in. But instead of Delphi hanging up on GM, they keep on losing money on every part they make. Why? Because GM really controls Delphi. So much GM money is in Delphi, that they don’t dare say no. It is, in reality, a figurehead corporation – legally separate – but functionally united with GM.

Let’s face it, GM can’t do without Delphi. They can replace a supplier here and there. Especially over time. But they can’t afford to lose them all at once. GM needs the components for their cars and can’t afford to let Delphi go under. That’s why they are hoping to get wage and benefit concessions out of this, then go back to business as usual and have Delphi come out of bankruptcy reorganized at the expense of their workers.

Hopefully, the bankruptcy court will see through this and do what is right. Hopefully, GM will take responsibility for their part in orchestrating this. Hopefully, they will own up to the promises they have made to their former employees over the past 40 years and do what is right. But hope doesn’t pay the bills for those who may be hurt by this.

This is the game corporate America has begun playing. This is what we get for having allowed Free Trade laws to be passed here. They don’t bring the rest of the world up to our standard of living, they are bringing us down to that of third-world countries.

Meanwhile, Delphi has announced that they have beefed up the severance and salary packages for their top executives. They say it’s to keep from losing their top people during these tough times. I so feel their pain…

Posted in Work

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