Delphi and UAW begin showdown in court
Though the proceedings in which Delphi is arguing for the right to terminate the contracts of over 33,000 workers is scheduled over a three-day period this week (Tuesday, Wednesday and tomorrow), it is much more likely the case will drag on for weeks because of the 34-person long witness list. The Detroit News reports that on the first day only the trial only made it through two witnesses and wasn't even done with the second as the day came to an end. When the hearing is over, Judge Robert Drain will have 30 days to make a verdict. If he does grant Delphi the right to terminate its contracts, the bankrupt supplier has said it will not necessarily exercise that right, though it does give the company a clear and perhaps indomitable advantage in contract negotiations with the unions.
We'll keep an eye on the proceedings as they move painfully slow towards a conclusion.
[Source: The Detroit News]
Photo Credit: Adam Rountree / Bloomberg News
Reader Comments (Page 1 of 1)
Gardiner Westbound 10:41AM (5/11/2006)
The legacy costs the domestic automakers claim are crippling their efforts to produce attractive, quality cars the market will buy at a profit are a phony issue. GM and the others paid shareholder dividends and astronomical executive salaries instead of putting funds into pension and benefit plans when it was due. Similar shortsightedness saw them defer designing new engines and transmissions. GM?s mainstay V8 engine is over 50 years old. Pensioners paid their full share for 30 or 40 years and are counting on those pensions and benefit plans.
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jamie 11:02AM (5/11/2006)
Excuse me Gardiner...
GMs pension fund is grossly OVERFUNDED. Many investors would love to grab that pile of loot and divvy it up, but Rick has those creeps under lock and key.
All's not quiet on the western front; but that is to be expected.
However has anyone noticed that the disease is spreading?
Reuters
British GM workers walk out over job cut comments
Thursday May 11, 9:48 am ET
http://biz.yahoo.com/rb/060511/autos_gm_vauxhall.html?.v=1
Crikey! GM is going after the jugular now. European plants cost twice as much to operate, so getting rid of these dinosaurs is a good idea. Or is it?
1000 jobs to be cut in Ellesmere Port (UK) if it is to be closed. One German plant is on the cutting block also. Not to mention the dreaded Saab (sob, cry) story. IG Metallcraft makes the UAW look like a candy store operation. They are EXTREMELY militant. This is bad timing and not very good news.
Things are staring to get dicey now on the eastern front too.
Long, hot summer coming up...think I will go to the beach.
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Rick H 11:05AM (5/11/2006)
Doesn't the Union get it? The company is Bankrupt becuase it cannot provide a service at a competitive price! Either make concessions or die. The only group that will deal with the UAW will be Delphi's creditors, as they believe there's a chance to retrieve some of their losses.
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Leo 11:46AM (5/11/2006)
Have you ever seen anything more pitiful than the UAW trying to play cards with all their cards face up on the table. If I wasn't so pissed at them fopr ruining the domestic auto industry I'd feel sorry for them.
Oh, and Gardiner Westbound's claim that "The legacy costs the domestic automakers claim are crippling their efforts to produce attractive, quality cars the market will buy at a profit are a phony issue," is too funny.
I'm sure GM and Ford just made up the $1,200 per car defecit, the 100,000+ retirees and that they just can pull money out of the air to commit to R&D. Gardiner drinks her corporate Kool Aid out of a barrel!
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Howard Kerr 11:46AM (5/11/2006)
I realize this picture was picked for maximum comments, but as a retired Armed Forces veteran, I find this worker and his union's attitude to be unrealistic.
When I joined the Navy in 1970 I was told that if I stayed at least 20 years and qualified for retirement, I would receive free medical and dental at a military hospital for life. The VA said I would receive benefits for nearly the rest of my life and, well, you get the picture. Retirees in the early to late 20th century were "promised" a lot of things that many of them now find they are NOT getting. As a retiree of the Armed Forces I am now forced to buy my own health/dental insurance (though the military also offers an insurance plan) and some of my VA benefits were curtailed 25 years after the end of the Vietnam War (I am a Vietnam War Era vet).
For these auto workers to stand there (literally) and think they are entitled to ignore the economic reality that exists on this planet...it just amazes me.
They are pretty much THE only group of workers in this country who enjoy such a high level of benefits. I also doubt they receive much sympathy outside of the auto industry, and what little they get is from other workers who are in the same boat. UAW....it's a cruel world today, what makes you think you should be the only group exempt from any pain?
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gbh 1:13PM (5/11/2006)
It really is kinda sad. Broken promises and people who relly think the world owes them the life of Riley they've been living. They do not understand that the world changed. Maybe not their fault, but they're gonna need to suck it up like everybody else.
My father is a Korean War vet. He accepts the reality that it just isn't there to give anymore. In fact, it never really was there. He's really concerned about the poor kids who are seriously injured in Iraq who will need hundreds of thousands of dollars a year *each* to keep them taken care of. And it ain't in the VA budget. But back to the direct topic...
Jamie, not sure where you are getting the data to suggest that GM's pension funds are fully, let alone, over-funded. As of relatively recently, PBGC (Pension Benefit Guarantee Corp, the FDIC of pensions) calculates them to be about $31 Billion short. Conservatively.
There are many accounting tricks that are currently legal, but will basically allow the company to project all sorts of ROI in the future, ROI that never happens.
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cowboy bob 2:49PM (5/11/2006)
While it is true that many benefits for retirees and present employees seem high, the point must be made that this was a commitment made by the employer. Those who were promised things while working should have those promises honored. The argument that these promises are expensive today is just too bad. This was the deal made when it was made. If a contract is made, no excuse to break it should be tolerated. The lesson here is to not promise more than you can reasonably deliver. The ones who suffer are those who have the benefits cut, not those who made the agreement. It would be more just to resind the vast moneys paid to exutives who now sit comfortably with their millions.
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CR 2:57PM (5/11/2006)
regarding:
"While it is true that many benefits for retirees and present employees seem high, the point must be made that this was a commitment made by the employer. "
Actually, the active and retiree health care benefits are renegotiated every 3 years. So, these can be completely removed next year by Delphi even if the court doesn't allow them to throw out the contract this year. At least as regards the health care benefits, these are not promises that are made for all time. They are subject to revision every three years. This is the reality. Since Delphi is bankrupt, they will be subject to revision sooner, however.
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cowboy bob 4:14PM (5/11/2006)
Post #8-CR, The fact is that as a retiree, from any company, you loose all representation the instant you take retirement. You can no longer vote on contracts, nor negotiate for anything. Therefor, any pre-retirement agreement for those ALREADY RETIRED should be honored. If you think some 25 year old auto worker cares if the benefits for a 60 year old are removed, you're sadly mistaken. They want their money now. You need to understand that many of those seniors who are now getting the shaft aren't the ones who vote on contracts, or have any voice whatsoever. A deal made should be honored. Period. Placed in their shoes, you might be a little more understanding.
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Tom Design 11:49PM (5/11/2006)
It's a phenomona called the "exhaust of capitalism" where elderly, older technology experts, and life experience is not respected and left to rot. Survival of the fittest and the cheapest and the bullyest, usually the new and young.
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Buckus 6:46AM (5/12/2006)
AFAIK, pensioners don't really "Pay Into" their pension...it's a free retirement benefit. Correct me if I'm wrong (I often am.)
Anyway, some people make good points that if Delphi goes away completely (liquidation) then those pensioners already on pension will get about 25% of their pension, and anyone not on pension doesn't get jack. That's the way it is.
Yes you can blame GM and Ford and Chrysler for over-paying and over-promising pensions. But you can also blame the UAW for negotiating things that don't allow the manufacturer to be competitive...like not being able to shut down factories to curb over-supply.
I wish "I" was getting paid $35 / hour to screw lugnuts onto a wheel. Heck, I'm sure every Discout Tire guy wishes that.
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