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Delphi's bankruptcy ominous sign for fading auto industry

Discussion in 'Legal' started by NCP24, Oct 11, 2005.

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  1. NCP24

    NCP24 Member

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    Bye-bye auto industry, hello rice burners.

    http://www.detnews.com/2005/autosinsider/0510/09/A01-341885.htm
     
  2. Werewolf

    Werewolf Member

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    The husband of a friend of mine who works at the GM plant in OKC earns $27/hr. All he does is sit on the line and push a button to start a robot welder when a car arrives and again when it is ready to leave. Add in overtime and this guy who can barely read and write is pulling down over $70K/year. That's just WRONG!
     
  3. boofus

    boofus Guest

    Good. The free market demands that you pay people what they are worth. When you have artificial constraints like union demands it throws everything off.

    Like all parasites, those unions can only survive as long as the host survives. Now the hosts are dying and maybe those leeches will start sucking each other dry.
     
  4. Crosshair

    Crosshair Member

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    People are starting to learn the hard way that no matter what unions say. When it gets tough, you're on you're own. Unionised companies just can't compete. I work at Wal-Mart and I'm happy where I am. Sure I may not get paid as much as I could elsewhere. But I don't have to worry about if I will have a job in 6 months and my scedule is very flexable. It also helps that my work is so good (I mix paint) that people ask for me by name. :) THAT is job security.
     
  5. Dain Bramage

    Dain Bramage Member

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    My aunt was over for a visit this summer. In true Eastern European fashion she asked me how much I make. When I told her, she said "Bah!", she would "die" on that amount.

    She works the counter at a tool room in a Daimler-Chrysler plant. I am an aerospace engineer. She makes $20K more a year than me. :what:
     
  6. longeyes

    longeyes member

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    Another example of how an engorged bureaucracy and blind union can ruin what ought to be a cash-cow business. A leaner, meaner Delphi will probably be back. Whether it will be owned by Americans or by Japanese is anyone's guess.
     
  7. NCP24

    NCP24 Member

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    So we should all take lower paying jobs, because we barely read and write or maybe because we aren’t worth as much for whatever reason?

    Don’t worry about your friend, because at the rate we're going some foreign person in a far off third world country will be doing “his job” for about twenty cent on the hour.


    It’s just a good excuse to move operations somewhere else.

     
  8. Molon Labe

    Molon Labe Member

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    A wage is a price. It is thus determined by supply and demand. Assuming there is competition, and assuming people can be freely hired/fired, a person who makes $5/hour is worth $5/hour, and a person who makes $500/hour is worth $500/hour. As it should be.

    Note where I assume "people can be freely hired/fired." Unions don't allow this. We thus end up with a situation where a person worth $5/hour is paid $27/hour.

    But we need not worry too much about unions. They will simply price themselves out of the market and disappear. Which is a good thing.
     
  9. longeyes

    longeyes member

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    "Delphi, Michigan's fourth-largest corporation and No. 63 on the Fortune 500, makes hundreds of auto parts from satellite radios to air bag sensors. While it employs 15,000 workers in the state, Delphi's sprawling global footprint stretches from Brazil to China, with 65,000 workers in Mexico.

    None of Delphi's non-U.S. subsidiaries was included in the Chapter 11 filing, and the company said its international operations would not be subject to the supervision of the U.S. bankruptcy court."

    NCP24,

    You're right. Just part of the Great Outsourcing of the fin-de-siecle.

    I think we are in a historical period where the boons of globalization are counterweighted by some very serious banes.

    What's the answer? Yes, we need to get smarter and more competitive, that's true.

    But what about the impact of the shorter-term dislocations?

    If workers owned all or part of their companies, that might help. It might be smart for workers in potentially affected industries--that could be everybody!--to invest abroad.

    Maybe the U.S. gov't should be investing in "emerging markets" and giving the gains back to displaced U.S. workers?
     
  10. NCP24

    NCP24 Member

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    You’re absolutely right this is the age of global economy. Now just how do you expect your common everyday run of the mill Jane & John doe to compete with Mexico or China’s low wages? I knew there was a good reason why the top ten percent of the population owned approximately 75% of all US wealth and assets.


    Longeyes,

    We can do a lot of things to change this such as stomping out greed, securing our borders and immigration reform. As for shorter-term dislocations we should prepare for the worse and hope for the best.
     
  11. longeyes

    longeyes member

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    Our edge is in technology, but tech isn't labor-intensive. We will have a problem sustaining the kind of standard of living we now enjoy, in my opinion. I'm not an economist but that's how it looks from here.

    Stopping illegal immigration would help, but it won't change the reality that other large nations are industrializing and have much lower wage rates than ours.

    We have increasingly becone a consumer rather than a producer nation. If that's the case, and not easily turned around, we should acknowledge the importance of our country as a market for other nations and charge accordingly for the privilege of selling to our consumers. Disperse the "extra" to workers in "disappearing" industries.

    In the last couple of years emerging markets have doubled or more in value. Suppose we'd invested our Social Security intake in those markets and given back the profits to American workers? We need to find a way, while we still have the investable capital, to take advantage of the shifts in the global economy in ways that benefit the people most seriously impacted?

    (Greenspan's on the way out; I'm available.) :p
     
  12. boofus

    boofus Guest

    Hey cry me a river. If you want to earn $80,000 a year with a high school diploma and your only skill is making horse and buggy wheels you are SOL.

    Adapt or die, just like the rest of us non-union workers. If brain surgery starts to get too crowded then learn a new trade just like everyone else in the job market.

    Effectively all the unions managed to do was temporarily prop up the horse and buggy wheel makers with fat wages and benefits at the cost of the company. Now the company is dead and they expect hand outs from someone else -> you and me.
     
  13. longeyes

    longeyes member

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    The lesson to be learned from Delphi isn't delphic, it's all too obvious.

    Still, we need more imagination to deal with the globalization problem than we're getting. It's easy for elites used to making six figures a year to tell the bulk of Americans to just ride it out and adjust, but nobody wants to see 25 per cent unemployment or the average wage here slipping to $20K. Can't happen?

    Imagination.
     
  14. NCP24

    NCP24 Member

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    I’m listening, but doesn’t that thought come awful close to socialism and the slippery slope to communism?

    I’m not advocating the union, just looking out for the little guy. Our country is slowly moving from manufacturing to a service oriented society which leaves us extremely vulnerable to out-side forces. All of this is for one little reason called greed and in the long run it will bite all of us in the behinds. Everyone’s in the food chain and eventually even the doctors lawyers and so fourth will be forced to lower their cost.

    You’re absolutely right Adapt or die.

    The company is not dead they just found cheap labor, it’s the American way.
     
  15. odysseus

    odysseus Member

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    It is a total failure of the US automaker executive leadership and the UAW union management, and the whole industry model currently in use. If competition does a better job outside the US, then so be it since we have to buy the products.

    Essentially I believe in the ability and strength of the people of the US and I think these failures will hopefully open the door to new innovative people and a US auto industry that does need drastic change.
     
  16. mpthole

    mpthole Member

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    Yeah... Good luck. :rolleyes:

    I can't really say it any better than the movie Wall Street.

     
  17. Cellar Dweller

    Cellar Dweller Member

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    Wake-up call (again)

    Supposedly, unions represent their workers' interests. After the steel industry's collapse, then several major airlines, pensions were dumped on FedGov at a reduced rate of payout.

    Why haven't the unions stepped up to get pension funds fully-funded within a defined timeframe? Why must Congress do it for them (after lobbying from "union leadership")? What the heck is the "leadership" doing? As is stands, union members are losing jobs and having pay and benefits reduced anyway, but continue to be in denial, partially due to union "leaders."

    There is no such thing as "job security" for ANYONE. There is no such thing as a guaranteed retirement. Unemployment doesn't pay $20+/hr, nor is there overtime. The service industry HATES overtime. A high-school dropout in their 40's or 50's isn't in demand, and good luck getting a replacement job for HALF the old pay, never mind reduced benefits.

    There are two choices:
    1. Continue in denial and receive a huge shock eventually. Retirees get medical/drug benefits reduced; if the pension is shifted to FedGov the payout is reduced.
    2. Negotiate for fully funded pensions, and get them insulated from the company's assets (a pension fund should not be considered or allowed to be used as an asset, since it is simply being "held" for the participants. If I have a friend who is storing his car, firearms or mattress stuffed with money in my house, I cannot use those as collateral in obtaining a loan.) Start saving some of that high pay in an IRA, start saving in treasuries and interest-bearing accounts and even stuffing a mattress is better than nothing.
     
  18. NCP24

    NCP24 Member

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    mpthole Good one!
     
  19. erik the bold

    erik the bold Member

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    As a former :eek: Delphi lead engineer (got out four years ago when the gettin' was good!), from my viewpoint, even though $23-27 per hour is outragous, they have significantly more issues than the ones with the UAW. However, the hourly employees I dealt with in the nine plants on three continents, were all hard working, conscientious, careful, and intelligent. Most had BS/BA degrees, because Delphi would pay for the schooling. Of course, I worked mostly in the out-state plants, in more rural areas away from the festering cesspool called Detroit. Maybe all the fat lazy ones worked there.

    Let's start with gross mis-management. :fire: Crappy negotiating with the UAW has bloated their healthcare and sundry compensation to enormous levels. How about nearly $40/hr per employee for insurance, etc...!! They would schedule massive overtime (60+ hours/week) because it was cheaper than hiring more people. Now they want the hourly folks to take a 63% pay cut. Could you survive on that??

    Bosses on top of bosses. At one time, I had three direct reports, all at the same level. One of the three, I didn't see for more than two years because of the Y2K scares. Spent all their time in useless meetings which never decided anything. Last project I saw before I left was them paying a machine tool vendor and subs $50 million to develope a pie-in-the-sky process which last I heard, still doesn't work.

    Stupid sales agreements with GM. One of the parts I was involved with, was sold to GM for $89.
    The part cost $82 to make. (7.9% margin). All of our competitors at the time, had quoted GM $127 for the same part. (35% margin) We made 3500 of these parts a day, 5-6 days a week. Doesn't take an idiot to see that leaving $34 millon on the table is a waste. :what:

    Glad I'm out of the auto industry......... :scrutiny:
     
  20. NCP24

    NCP24 Member

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    You think $23-27 per hour is outrageous and most had BS/BA degrees? Oh yea- do you know how much their counter parts make in Mexico?
     
  21. f4t9r

    f4t9r Member

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    NCP24 You are right !!!!!!!!!!!
    the men that built this great industrial empire, made sure of it because it was their money at stake. Today, management has no stake in the company!
     
  22. Waitone

    Waitone Member

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    Breakeven point of all US corporations will be adjusted down. Delphi is merely the latest entrant into bankrupcy court. Delphi will off load its pension programs on the federales through the PBGC. It was created to give the big boys a way out from under pension obligations. Welcome to the future. The cost of production in the US is out of synchy with production elsewhere. We have to reduce our costs of we will continue to lose industry. Just exactly when the federales will wise up is anyone's guess, but it had better happen.
     
  23. model 649

    model 649 Member

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    As the wage structure of the various UAW plants is flattened down, the remaining wages in ALL manufacturing plants will follow closely, especially the transplant auto plants. They pay well to keep the union out, but soon they won't need to. I'm no fan of the union, however, our fading standard of living was largely fought for and won through collective bargaining. The forty hour week, paid vacations, health benefits, improved working conditions, pensions, etc. Sure there are and have been abuses, but am I hearing a tinge of jealousy? Many workers live in "right to work" states. As far as I can tell, they are "right to work for less" states, and will become moreso as less and less work is performed there because even if we worked for free, we could not compete with countries like China. Believe it or not. Free trade and globalism have destroyed our economy in terms of manufacturing. God help us if we need to fight another large war, we have a nearly non-existant manufacturing base. Service economy? Would you like fries with that? This once-great economy was built on MANUFACTURING tangible, saleable, goods, and selling them here and abroad. Corporate "leadership" is not interested in "making a living", only in "making a killing", and by any means necessary. Stock price down? Lay off some people! Eventually the foriegn investment that is sustaining us will leave. All that money from Wall street that floats the refinancing will evaporate. The "economy" will collapse like the house of cards it is. Not pretty, but it's already in motion. How many investors will inject money into a company that cannot accurately state it's earnings and must "restate" time and again. Corporate officers are openly looting their companies, would you want to invest? There is no one cause, not unionism, greed, etc. and there is no one solution, however, things are going to get a whole lot worse before they (hopefully in my lifetime) get better. Buy guns, cause you'll likely need them, and don't forget the ammo.

    Josh
     
  24. R.H. Lee

    R.H. Lee Member

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    It IS bigger than just Delphi
    http://www.voanews.com/english/2005-10-11-voa69.cfm

    They're accruing liabilities for future expenses they have no hope of paying. Barring huge concessions from the union, they're on the road to bankruptcy, reorganization and outsourcing.
     
  25. Standing Wolf

    Standing Wolf Member in memoriam

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    Sucking each other dry? No. I predict they'll run crying and screeching to Uncle Sam, who'll be glad to help them suck us all dry.
     
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