The Detroit News has lodged another exhibit in the attempt to reconstruct how General Motors used an ignition switch part that might not have met the company's own standards, citing acrimonious relations between it and parts supplier Delphi just after the turn of the millennium. The short story alleges that that Delphi made a part that wasn't up to scratch, but the long story is about why Delphi may have done such a thing and why GM would have accepted it.

Until 1999, Delphi was a division of GM, but an initial public offering for the auto parts unit made it a separate company and had everyone crowing about the benefits the move would accrue to all parties. According to The Detroit News piece, three years later, Delphi still couldn't get by without GM's money, but The General was treating it like any other supplier and squeezing it for cost savings with some truly Machiavellian tactics that many powerful purchasing department heads would file in the drawer marked, "It's Just Business." The occasional consequence was "suppliers bidding so low that they had to cut corners to meet the promised price."

Why wasn't the problem caught and stopped even though GM might have known about it? Again, according to the report, fixing the part meant production delays, but Old GM's contract with the United Auto Workers included a provision for job banks, which meant that workers had to be paid whether or not lines were running. Idling factories to fix the part would obliterate all the savings gained by hammering down the price, an outside analyst saying of such moments, "There were unquestionably times when parts were accepted that did not meet GM's specifications. But you had to keep the production lines running at all costs." None of it ended up helping Delphi, either: the company, already in "a low- or no-margin business" and saddled with heavy legacy benefits from its GM days, declared bankruptcy in 2005 and didn't exit it until 2009.

Head over to the DetNews for the full skinny on this new wrinkle to GM's ongoing recall nightmare. It's a compelling read.


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    • 1 Second Ago
  • 9 Comments
      Graham
      • 8 Months Ago
      With all of the demands from the UAW, GM could no longer build a good car economically. So, they built death traps that still cost more than the imported competition. When will America learn that unreasonable union demands hurts all of us.
        jaydc1388
        • 8 Months Ago
        @Graham
        When will conservative America learn that most, if not all foreign auto manufacturers have strong unions in their home countries as well as robust social, education, and economic policies? probably' never, because free market capitalism and stuff.......
      Eggmania
      • 8 Months Ago
      this will somehow be used to dismantle unions further and rob the american worker
      Fountain42
      • 8 Months Ago
      Get the popcorn ready, light the fire and sit back in the arm chair folks, this story is about to be a good one!!!
      Daniel D
      • 8 Months Ago
      As much a story of the flaws in capitalism, which is a far from perfect system.
      GasMan
      • 8 Months Ago
      GM was once so large and profitable that even everyone thought the good times would go on forever and they'd better get their share. In this case, greed was not good. Management, out for their short term bonuses, agreed to crazy union demands and shipped bad product. Unions, trying to get benefits for workers, lost sight of the mission of workers - to work. And politicians, out for votes, made laws giving too much power to unions. And finally, consumers, out of misplaced loyalty, continued to purchase shoddy products. As an ardent capitalist, this story makes me sick and shakes my belief in western culture.
      Jackson Ashpen
      • 8 Months Ago
      In order to get the high quality standard service, we must start on a small thing. And the thing is being honest especially to your clients. ___________________ Jackson Ashpen http://www.cincoranchinsurance.com/auto-car-insurance-san-antonio.10.htm
      Neez
      • 8 Months Ago
      Definitely a double whammy by the UAW. First they had to keep the production line going due to union strongarm contract. Then because they were a GM company, Delphi had to honor all their employees obscene UAW negotiated benefits which hurt them for cash. Ultimately, it's still GM"s fault, but they were stuck between a rock and a hard place.
      fig
      • 8 Months Ago
      I work at the company that supplies the plastic pellets for Delphi....we just had a major contract for a new type of material put on hold due to this whole ignition switch deal with GM...we were shipping 6000 lbs a day until...bam...just heard it is about to be taken off of hold though...