Delphi demands huge cuts from labor
The downward spiral at Delphi continues. According to a memo obtained
by Detroit News, Delphi is demanding huge cuts from the UAW. The company wants to slash wages by 60 percent, cutting
down as low as $10 per hour for production wages, eliminating a jobs bank for laid-off works, and the right to close or
sell over 20 manufacturing facilities during the next three years. Sources also say the GM is refusing to provide
financial support to the scandal-ridden automotive parts supplier. Everyone is skeptical that Delphi can pull any kind
of deal together before federal bankruptcy law changes on October 17. Additionally, any concessions from the UAW will
not help sustain Delphi without serious GM backing. Delphi will most likely file for Chapter 11, at which point the UAW
may face similarly gruesome concessions.
Reader Comments (Page 1 of 2)
BF 10:45PM (12/18/2005)
Good. File for Chapter 11 right away. It is time to send these UAW pigs a message. Hopefully this will be the first shoe to drop in helping GM to rid itself of the parasite known as the UAW.
And before all of you get your panties in a bunch, I truly respect the workers and want them to be paid well. But, the union leadership is corrupt and they are crazy if they think they can have 1960's style and 75% of market share types of benefits in a global economy. Today a high school education usually means a lifetime of flipping burgers for the average guy who doesn't live near and auto plant.
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stratojet 10:45PM (12/18/2005)
This is one of the saddest day in the US Industry panorama. The UAW is now at the terminus, whatever they say about management and the ghost from the past.
This organization negociated out of proportion wages and benefits for jobs that basically don't worth this much in the free market. Their pay packages, even with the cuts proposed, would still be way better than Chapter 11. Nevertheless, this deal will most likely be rejected; the UAW do not want to reopen the contract until 2007.
This is the end of an era and either three things could happen:
1- The UAW will change their philosophy and collaborate to try to save their own Auto industry
2- Like a parasit on a tree, they will try to find another host since they killed the first one.
3- They will fight like there is no tomorrow , do what they do best through strikes, intimidation and sabotage.
My guess is this: it will be a combination of those possibilities.
My thoughts are going for the honest workers at Delphi that don't deserve this avenue. Also I predict , as usual, that many bloggers will cheer at this news and will be so happy to see so many lives destroyed.
At least, have the decency of not celebrating too loud; maybe one Delphi employee is your neighbour.
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mark 10:45PM (12/18/2005)
how is this the fault of the UAW? the UAW had nothing to do with poor management of the company.. you sure don't see the millionair execs taking a cut in pay, DO YOU!??
I am not a union member myself, but I think it's funny that the UAW is blamed for everything.. This is only about a cheap company doing bad things to their employees.. It wouldn't be a bad thing if Delphi went out of business, since their employees aren't going to be able to make a living on $10/hr anyway! They'd have a better chance at a fast-food place!
When are people going to realize that the employees are not the ones to blame, but the faulty management of the company?!! Stop blaming the UAW and START BLAMING the management of the company!
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mike 10:45PM (12/18/2005)
It used to be that ever caliper that came out of Delphi's Dayton plant lost $5 for Delphi. Why stay in that business? Because the unions (more than just the UAW) prevented any adjustments during the contract life. GM is looking pretty smart for unloading Delphi - and Fiat - and we will see about Subaru.
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Max 10:45PM (12/18/2005)
Those UAW workers did not have a say back in 1999 to split from GM. After working for GM for years they became Delphi employees over night. I'm sure the UAW is willing to give back some contract items, but a 60% pay cut is a bit much to grant. Could you afford a pay cut that large? After year's of working for a company, and looking toward retirement, the rules change. You no longer have the commitment from the company you were loyal to for years of your life. If they can't agree to help Delphi, there are alot of people who are going to be hurt. The Michigan economy will feel the sting through it's tax base. There are approximately 6 people that will be affected for every 1 Delphi employee. The small manufacturing shops that do work for Delphi could very well go under. Here's a thought, how much is management going to help?
After all it's their company also.
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aunt jemima 10:45PM (12/18/2005)
no matter how I feel about the unions (not really a big fan of them), telling someone to take a 60% pay cut is harsh.
i wonder if the senior management plan on sharing in the pain?
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Finished.Law.School 10:45PM (12/18/2005)
Delphi is currently paying wages for UAW members who were previously laid off by Delphi. (Source: http://www.detnow.com/wxyz/nw_local_news/article/0,2132,WXYZ_15924_4140149,00.html) I would say that this is a good reason to at the very least partially blame UAW.
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Charles W. 10:45PM (12/18/2005)
http://www.freep.com/news/latestnews/pm6518_20051007.htm
Don't you feel sorry for anyone...
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Glenn Arlt 10:45PM (12/18/2005)
Once Delphi goes "bust" (bankrupt) then GM will probably follow.... Delphi is GM's largest supplier. I cannot see the UAW being smart enough to realize the jig is up and accepting Delphi's requirements (not requests). I noted that GM has signed a CAW contract in Canada - and assuming that GM files bankruptcy and has their UAW contract declared null and void, I can see that the UAW would immediately walk-out - resulting in no US production. I suppose if GM were to import Canadian, Mexican, South Korean, maybe even Brazilian GM and GMDaewoo cars they could possibly retain 15%-20% of the US market - which is probably about where they should be anyway.... The major losers would be the UAW members, of course. Naturally, GM would have to scramble to get components from China and India to replace parts from UAW plants, but they probably could be up and running by January again. That'd make sure they cleared out the dealer lots for a fresh start.
The clock is ticking. The law changes in a few days, making bankruptcy more difficult for companies.
I think the overall fault lies with both the UAW and the management of GM and then Delphi. The UAW is known to be a pretty corrupt organization - and just as in world affairs, with nations, the more corruption there is, the worse off the standard of living for the general population. Well, the UAW's corruption is going to now apparently catch up to it - and as usual, the average joe/jane pays (as we all will once the taxpayer gets stiffed with the bill for the already bankrupt retirement plans at Delphi and GM).
As for the management, of course, they'll float away on their golden parachutes. Maybe there should be a special wind-fall tax of 200% for such situations, much as I usually hate taxes, "if I were in charge" I might make an exception for that one....
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Tankstelle 10:45PM (12/18/2005)
This is sweet justice for anyone who ever made the time and money sacrifice of actually going to college. I don't care whose fault it is, I'm just glad that all my high school classmates that used to skip school and sc*ew around in class are going to get compensated on a level equivalent with the effort they've put forth throughout their lives. HA!
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Chris K 10:45PM (12/18/2005)
Hey Tankstelle,
Its too bad youre spending your life becoming a vengeful prick while I started a company, treated my employees really well, and became rich. HA!
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ccweems 10:45PM (12/18/2005)
Ive read many of the comments and I have yet to read one that compares UAW wages with what is being paid at foreign owned plants in the US. I expect that Delphi would be quite happy to pay the wages benefits that Toyota and Honda can afford and profitable to boot. The new Toyota plant in San Antonio, a fairly prosperous city had 10 applicants for every job. I expect that should Delphi enter Chapter 11 and offer Toyota wages and benefits, many would welcome the opportunity. There is no need to resort to apocalyptic Chinese predictions. UAW is guilty of overreaching and must adjust to a competitive world within the US. And the UAW wonders why it cant organize these new plants? I expect the problems of Delphi and Visteon are on lunchroom bulletin board at foreign owned plants across the south.
Oh, and lastly stop bitching about management bonuses. The Delphi job bank (a bunch of employs for which there is no work, yet are paid full wages) cost the company far more than executive salaries. At least the managers are doing something, even if it is wrong.
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TB 10:45PM (12/18/2005)
Management at Delphi has already taken a 15% cut across the board along time ago. Problem is, if you cut their pay much more then they will leave in droves, leaving nobody behind to develope new products and process.
The biggest problem for the hourly workforce is that people are not going to pay that kind of wage to people without college degrees. They don't have the education or skills to do anything else, where the management types do. People in management and those with an education have the ability to get jobs with similar pay, whereas the average hourly worker has no other option.
That being said, I feel awful for these folks. They grew up in a time where all you needed was high school. And now they are going to get creamed because they did not see this coming 30 years ago.
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jim3480 10:45PM (12/18/2005)
When oh when will unions and management realize that BOTH are to blame? It is the unfettered greed and sloth of unions, combined with the arrogance and short-sightedness of management that caused all of these problems.
Sorry unions..but you cannot go on forever making six figures for low-skilled or unskilled positions...pay no healthcare premiums or Rx co-pays...get paid 95% wages for not working...force ridiculous and totally unproductive work rules.
If union members are so 100% pure in this, I suggest that once Delphi/GM go under, start your own business and pay those you hire the same benefits, perks, and pay that you received in the union. Wanna guess how long you'll stay in business?
As for management, of course they hold much of the blame. No one in their right mind would negotiate such business-killing contracts with the UAW that they have over the years. They should have taken on the UAW long ago. Now it is too late. They were too late to focus back on cars, once the SUV party ended, as it has. I could go on and on with this.
Now...unions...repeat after me..."both management and unions are responsible for the state of affairs in the domestic automotive industry today".
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Charles W. 10:45PM (12/18/2005)
Economically speaking, this is good news. This is the "Invisible Hand" that Adam Smith wrote about.
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Steve J 10:45PM (12/18/2005)
The UAW does not set its own wages. Last I checked, negotiations require two parties, and it requires those paying the wages to actually agree to pay those wages. To say that the UAW shoulders the blame for Delphi's financial woes is grossly inaccurate. Delphi, and before it was spun off, GM agreed to each contract provision and agreed to a length of time for those contracts. Nobody held a gun to their head and forced them to agree to those contracts.
I'm not saying the UAW is blameless. They have resisted changes in work rules that could have made factories more efficient and therefore more cost-effective. They often have an approach of not giving any concession to management for fear of seeming "weak."
The biggest problem is a culture that goes both ways: too much of an us v. them mentality. Management has shown no loyalty or sense of obligation to its employees for a long time, and it can hardly be surprising for workers to feel less than willing to sacrifice in such an environment. Labor has been too ready to blame management for everything and lay all issues on their feet to solve, rather than looking for ways to work together to solve issues jointly (btw, I'm speaking of the U.S. auto industry in general, not just Delphi). Relations have been poisonous for decades, and it's not going to change anytime soon.
Both sides need to take responsibility for what they can, and neither side seems willing to do so. Blaming one side over the other - e.g. "UAW pigs" - is inaccurate, short-sighted and, I would argue, bigoted.
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Steve T. 10:45PM (12/18/2005)
"Nobody held a gun to their head and forced them to agree to those contracts."
Puh-leeze! What do you call crippling strikes?
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Steve J 10:45PM (12/18/2005)
"Puh-leeze! What do you call crippling strikes?"
A right that workers have under U.S. law.
Just like employers have the right to layoff or lockout at will.
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Max 10:45PM (12/18/2005)
I guess that bad marketing, design and quality doesn't matter. It's got to be those nasty UAW folk to blame.
Hey, GM has another brain storm. Let's keep building those SUV's. The public could care less about gas price's. When the bottom falls out and we go chapter 11, we can blame those nasty UAW folk's again. While we are at it, let's give the exec's a raise. Can't keep good help without paying the big buck.
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BMT 10:45PM (12/18/2005)
I agree, Steve T. Look at the CAW patterned barganing agreement. They threatened to walk-out if GM did not accept a patterned agreement...an agreement made with other manufacturers that had absolutely nothing to do with the issues facing GM. And what did GM get out of it? The ability to let go of workers through attrition..meaning they were gonna leave anyway. What a deal. Bottom line is if their skills are truly worth $26 an hour, then in a rational marketplace, they should be able to leave Delphi and find a similar job at a similar wage WITHOUT the threat of a strike.
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