GM/Delphi/UAW - My Theory...What do You Think?

[rbattelle]

With regard to the GM/Delphi issue I've developed a theory. Tell me what you think.



****OPINION*****OPINION****OPINION****NOT FACT***OPINION***

GM formed Delphi in 1999 specifically for the purpose of breaking the UAW. They knew Delphi couldn't maintain profitability, and gambled specifically on their eventual bankruptcy. This was done in order to save General Motors - itself spiraling toward eventual insolvency due to ever-increasing labor and raw materials costs.



The plan all along was to get Delphi into bankruptcy to trigger a series of events leading to the demise (or at least the nullification of influence) of the UAW.



What I think is going to happen over the next 2 years:

1. Delphi declares bankruptcy (this already happened)

2. Dephi makes demands on the UAW that absolutely cannot be agreed to. The severity of demands for wage and benefit cuts continues to be greater than the UAW is willing to bear.

3. Mid-December 2005 the bankruptcy court nullifies all UAW contracts with Delphi. This very rapidly precipitates a strike by the UAW.

4. As a result of the strike at Delphi, GM shuts down. Fortunately for them, however, they've stockpiled more than a 100-day supply of vehicles, so they can continue to do business for a short time.

5. GM, having already sustained billions in losses over the past couple years, can no longer remain in business. It declares bankruptcy of its US operations sometime in 2006 or early 2007.

6. GM's bankruptcy immediately renders the UAW insignificant.



Why all the trouble? Because GM (and the rest of the automotive community) realizes that the demands from the UAW are absolutely unsustainable in the global economy. The only way to ensure survival once Chinese automobiles arrive on US shores is to eliminate the UAW and move immediately to cut-rate labor (possibly including moving the majority of US manufacturing operations overseas).



I developed this theory shortly after Rick Wagoner, CEO of GM, sent out an unsolicited email to his employees saying "we're not going bankrupt". As soon as that happened I thought, "yup, they're headed straight for bankruptcy"; unless by some miracle Delphi alone manages to break the UAW and when contract negotiations are opened in 2007 GM manages to get them to agree to MASSIVE wage and benefit cuts (greater than 50%).



So am I loopy as a loon? You gotta admit, it sure does answer a lot of nagging questions.



-Ryan

 

[CWebster]

I don't think that scenario can happen... . if GM were to file bankruptcy, you would see thousands of sub contractors and suppliers following suit. Bankruptcy on that scale would probably have a major impact on the economy... which the government won't allow. I think that if became that dire, the government would have to step in(a-la Chrysler). I do agree that it is labor motivated, but GM is not hurting for money... . that is only the perception that they are trying to push. Also, having been a supplier to them for years, I can honestly say that any "pain" that they go through is well deserved and not nearly enough. I've watched them bankrupt companies by holding out payment and then go in at the auction and "re-purchase" their product for pennies on the dollar... . many times, and intentionally. Not large multi-national companies, but small and medium sized businesses, family owned by good people. Makes you sick.

 

[Hohn]

Ryan, I think you may be on to something. Or maybe just *ON* something, hehe.


I have no love for GM. I have even less for the UAW. GM is now reaping the fruit of the unsustainable demands that it allowed the UAW to levy upon it.

Where else but in the auto industry can you make $25/hr to install door panels?? Then, you get your gold watch and a pension, too! Not to mention lifetime benefits, etc.

The UAW members basically used extortion to get a sweetheart of a deal at the expense of their future members. Who cares if our present demands kill the company the employs us, right?? At least *I*, the UAW worker "got mine. " Screw all the rest of you.

Unions in general are a huge barrier to competitive enterprise and American prosperity. Capitalism (and its efficiency) hinge upon freedom of choice. If a company has no freedom of choice in its hiring, it CANNOT be competitive in the long term, and CERTAINLY not in a global economy populated by OTHER companies that are not so encumbered.

GM is far from the innocent victim, but I have no problem watching the natural consequences follow the stupid actions.

Maybe if we ask them nicely, Honda and Toyota will come in and take over the US auto industry to show people how a corporation should be operated.


The only "victim" in this case are those naive people who believed that the union was helping them and joined. The reality is that the union is helping ITSELF (namely, the powerful people at the top) as they line Democratic pockets and throw its membership is Socialist bone or two--- all the while KILLING THE GOOSE THAT LAYS THE GOLDEN EGGS.

Or with GM, maybe they were just laying eggs, period. Aztek, anyone?

BTW-- Ryan, I'm typing this from the USO here at DIA. The nicest I've ever seen, for sure. Visit it if you have the occasion.
jh

 

[rbattelle]

Well, Hohn, you and I are in total agreement. Clarify for me: do you mean "Defense Intelligence Agency" by DIA, or Dallas International Airport? What's your AFSC, anyway... I wonder if you'll ever end up at Wright-Patt.



CWebster - you're right, it's pretty far out there. But I thought it was an interesting scenario. Someone bring this thread back up in 5 years...



-Ryan

 

[klenger]

I'm guessing Denver Internation Airport, since he hales from Cheyenne Wy.

 

[J Shocik]

From RBattelle:

Tell me what you think.

What I think is GM is going to file bankruptcy, like the airlines did a few months ago & skip out on the funding of the UAW pension plan, which alone adds about $1500. 00 to ea/GM vehicle. The government then picks up the pieces (of what's left) & pays whatever. Just what I think... it's possible...

 

[Jim Smith]

GM seems to have been asleep at the switch for along time with their products. I worked for one of the other car companies and we always wondered why they were not getting it together. Productivity gains should have been simple with ( Japanese Kaizen) especially with the Toyota joint venture.

But remember if you are in and around a GM, Ford or Chrysler plant these folks made good money and have paid taxes for their wages which probably built the infrastructure you are using and the spin off dollars in each community.

 

[SGibson]

How much should they make an hour? How about a union carpenter,aircraft worker,electrician,or laborer?How about the ceo or V. P's or the top 2500 white collar people, ie designers, engineers, etc? How much do you make Hohn? Don't you fly cargo planes for the AF? Would you feel confident if your bird was constructed by 8/hr workers? you know the kind, 39hrs a wk and no benefits, nonstandard workweeks, like migrant workers, a whole workforce of jobshoppers, What kind of benefits do you get? Will you one day go fly for one of the airlines? bet thats not 25/hr. Why should some of these upper brass make 100 times what a worker on the floor makes? for all those great buisness decisions? No matter how much some elitists fantasize about it this is not nor ever will be Japan or China,all the fishheads&rice I can eat on the floor of my cardboard shack ain't happening and I'm not sorry about it. Don't feel beat up on, I am proud of what you do for us and I acknowledge your sacrifices as only a veteran can, I am not saying the unions are guilt free I am a IAM member and I know what goldbricking goes on but I think the problems a couple of steps up the ladder its just easier to find a stick to beat the dog with, than to eliminate so many layers of corporate fat.

 

[Carlsummers]

..... , like migrant workers, a whole workforce of jobshoppers, ... .

Here in FL, we have a rather large workforce of migrant workers collecting and baling pine straw for landscaping. I dare ANYONE to show me a waspm that will work as hard for as little as they do. That work force is primarily from Mexico, and I have to hand it to them... . Americans should take a lesson in work ethics from them. How about thinking a little before you use that phrase again as a slam. Off my soapbox.

 

[SGibson]

Actually I paused before I said that, but were not talking semi-skilled to skilled labor here are we? or being able to pass a drug screen much less an apprenticeship, can they read? I lived in FL for 6yrs. , 4yrs in the NAVY, 2yrs as a civ. Hodcarried for a yr and a half for about half what union states were paying, then for Grumman in St. Aug for awhile as a Aircraft mech for about half wages again, funny thing is bread, milk & new cars werent any cheaper nor were my kids diapers and formula, bout starved to death in FLA.

 

[dezeldog]

Here in FL, we have a rather large workforce of migrant workers collecting and baling pine straw for landscaping. I dare ANYONE to show me a waspm that will work as hard for as little as they do. That work force is primarily from Mexico, and I have to hand it to them... . Americans should take a lesson in work ethics from them. How about thinking a little before you use that phrase again as a slam. Off my soapbox.

Carl, the problem I have with the migrant worker is that he is trying to lower my standard of living. I would have no problem bailing pine needles if it paid a decent wage ie one that would afford me to put $2. 50 gas in my car and one that would allow me to have some kind of health plan which I'm sure that alll of the ceos in this country have. The way I see it you can't have it both ways. . cheap labor/imported labor, it will come back to bite you which it already has in many cases.

Who does imported labor benifit??? Surley not the middle class of this country as their jobs are going out of the country like 40 going west. I have no problem with the Mexicans bailing pine needles for peanuts however I would like to see that "Cheap" labor reflected in the price of said pine needles otherwise it is no different than the auto, clothes, electronics and steel industry. When was the last time you saw the price of the above items come down??? Wouldn't you think that with all that cheap labor and Americans workers losing their jobs at the speed of lite that we would atleast have it reflected in the price of said product. I don't think so. Once again corporate greed has reared its ugly head. Just my . 02 worth. Whadaya think.



Jim

 

[jwilliams3]

Anyone who thinks this is all union labors fault is dreaming.

 

[rbattelle]

Anyone who thinks this is all union labors fault is dreaming.

I think it's an even split between the UAW and GM corporate. GM plowed the field with poor products and the UAW sowed the seeds of greed and unsustainable benefits. Now they're both about to reap an unfortunate harvest.



-Ryan

 

[jwilliams3]

Don't forget the corporate greed.

Yes, I also do think the UAW shares the blame.

 

[rbattelle]

Well, I was completely and utterly WRONG with this crazy theory. Oh well, that's why it's called a "theory".



-Ryan

 

[10.5 Dave]

You may end up being correct,the timeline will just be off a little.

GM needs to build stuff people want to buy and the greediness of the UAW has to be put in check.

An auto plant is the only place I know of where a person with an 8th grade education can make 100k a yr doing unskilled labor. With a free 15k a yr insurance policy to boot.

It isn't sustainable and big cuts are coming down the road.

 

[daytripper63]

I think it's an even split between the UAW and GM corporate. GM plowed the field with poor products and the UAW sowed the seeds of greed and unsustainable benefits. Now they're both about to reap an unfortunate harvest.



-Ryan

Well said

P. S. when G. M. files Bankruptcy not If. Big Business uses bankruptcy a little differently than people, G. M. will use it to nullify contracts with unions etc. not necessarily to not pay there vendors or get out of paying them, they are looking at the big picture and future profits etc

 

[daytripper63]

You may end up being correct,the timeline will just be off a little.



GM needs to build stuff people want to buy and the greediness of the UAW has to be put in check.



An auto plant is the only place I know of where a person with an 8th grade education can make 100k a yr doing unskilled labor. With a free 15k a yr insurance policy to boot.



It isn't sustainable and big cuts are coming down the road.

And this is why everything cost so much 3. 00 gas 3. 00 milk 10. 00hr babysitter :-laf i remember . 29cent gas heck my house has gone from 185K 6. 5 yrs ago to 550,000 today, pay has not increased that much that fast. If everyone didnt have to make so much things wouldnt cost so much. But i think its too late for that now

 

[daveshoe]

Delphi has a predictable history of squeezing down the benefit structure. Their SALARIED workers[engineers] have been in the vice for a while now. An example is two brothers . one brother took a buyout offer to keep his GM retirement,but his younger brother did not have enough years in to get the offer. His benefits are on a much lower tier than the older brother. Now both brothers are seeing the prospect of an ever lower standard of living as the chickens come home to roost. Dayton,Oh has a pretty good record of ''helping'' GM out by agreeing to wage concessions and work rule changes. The agreement was based on the proposition that the job cuts would be limited.

GM will probably keep these people and plants only untill new plants are up and running in low wage countries. You can blame poor management or lazy workers all you want,but the naked truth is that OSHA and environmental compliance are at least as much responsible for plant relocation and outsourcing as the other factors. Add to this health care costs of the older workforce employed by GM,and the handwriting is on the wall.

When I talk to GM people I know to have good work ethics,they constantly seem to criticize GM for not repairing the tooling to turn out better parts. When the Japanese purchase old GM tooling,the first thing they do is put new bushings ,ect. in the machine so the part quality immediately improves. That is one way that the high wage American worker can be shown to turn out inferior parts,and to justify more and more outsourcing.

The TDR magazine in recent issues really explains this subject much better than I can.

 

[SHobbs]

Working for the railroad and supplying GM with railcars I can tell you first hand that GM wastes alot of money just getting the parts they need. We supply not only the main plant but three other warehouses all within a 5 mile radius of each other. GM has a fleet of lease tractor trailers running back and forth between all of them and the main plant. They also have about 4000 employees that are paid to not work, they show up at a building and spend their day doing nothing that has anything to do with assembly line production. Before the unions are to be blamed you need to look at how GM does it's business. Also look at the top tier of the company are they taking any hits in their pocket to help, no. It is never the workers, the people that make the company that get a break.