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Monday, October 10, 2005

Welcome to a Global Economy UAW

Most of you are probably aware that Delphi filed Chapter 11 reorg. Matt used to be a staff member of the Delphi Business Leadership Group. He left last October to take the Controller position at Federal Mogul, Greenville, MI. Federal Mogul has just finished with what Delphi is about to begin - the journey of reorganization.

(In case you need a familiar product to associate Delphi with, think XM Satelite Radio.)

What people need to realize, specificaly unions, is that they can't continue to demand ridiculous wages (holidays, leave time, etc.) for the manufacturing of non specialized parts that can be made overseas. There is a bubble when it comes to labor salaries, and when people have been paid 25-50$ an hour for a job that can be done overseas for 8$ an hour there is a problem, and the salary bubble will burst. Again, it sucks that jobs are going overseas, but businesses do what keeps them in business. It is a GLOBAL ECONOMY. Stop trying to deny it. Accept it and move on.

Yes, this is going to hurt the employees and it sucks, but why didn't they think about losing their wages and jobs while trying to negotiate the union contracts. It sucks to have to take a pay cut, but wouldn't you rather take a pay cut and have a job, than to not have one at all? I sure as hell would. But we are talking about people who pay 700$ a month for Cadillac Escalades and other high dollar cars because they are GM employees and they get a discount. All they care about is how much bling they can get. As in any case, it is not the job of an employer (or the government for that matter) to have to pay for living expenses of employees who were not smart enough to save for a "rainy day." It sucks but that is the way it is.

I would also like to say to those people who are complaining about the "retention bonuses" -THIS IS BUSINESS FOLKS. These people are highly educated and extremely talented, not to mention have a boat load of experience in the industry. When most people hear that their company is filing bankruptcy they jump ship as fast as they can. The problem for Delphi is that there are other businesses in the auto industry (i.e. Federal Mogul) who could steal this talent. To prevent this, they offer retention bonuses. I don't fault them. Besides, the executives are just as nervous as the men & women in the plants. However, executives don't have union representation lobbying for their jobs.

The argument could be made " if they are talented why can't they fix the company?" Well, Delphi was a spin off of GM, it was a new company with old GM liability. Just think if you started your own business with millions of debt, and labor & pensions costs that outweighed any money you made? It is impossible to dig your way out of debt. It isn't the fault of the executives. If your expenses (costs) out-weigh your income you are going to fail.

While this seems like it is bad for the economy, in the long run it will be better. Delphi will emerge from bankruptcy stronger and will continue to provide jobs. If Delphi doesn't do this now, eventually it would be worse. Imagine if Delphi had to shut down all operations - EVERYSINGLE JOB LOST. It would be far more devastating. DELPHI is the MAJOR Supplier to GM. IF Delphi shut its doors GM would be screwed - not to mention all the people who work at GM. Then there is all the the little suppliers and tool & die shops that would have to close because their business would then be lost.

Below are the 39 entities that were included in the filing.
1. Delphi Corporation (Parent) (Delaware)
2. ASEC Manufacturing General Partnership (Delaware)
3. ASEC Sales General Partnership (Delaware)
4. Aspire, Inc. (Michigan)
5. Delco Electronics Overseas Corporation (Delaware)
6. Delphi Automotive Systems (Holding), Inc. (Delaware)
7. Delphi Automotive Systems Global (Holding), Inc. (Delaware)
8. Delphi Automotive Systems Human Resources LLC (Delaware)
9. Delphi Automotive Systems International, Inc. (Delaware)
10. Delphi Automotive Systems Korea, Inc. (Delaware)
11. Delphi Automotive Systems LLC (Delaware)
12. Delphi Automotive Systems Overseas Corporation (Delaware)
13. Delphi Automotive Systems Risk Management Corp. (Delaware)
14. Delphi Automotive Systems Services LLC (Delaware)
15. Delphi Automotive Systems Tennessee, Inc. (Delaware)
16. Delphi Automotive Systems Thailand, Inc. (Delaware)
17. Delphi China LLC (Delaware)18. Delphi Connection Systems (California)
19. Delphi Diesel Systems Corp. (Delaware)
20. Delphi Electronics (Holding) LLC (Delaware)
21. Delphi Foreign Sales Corporation (Virgin Islands)
22. Delphi Integrated Service Solutions, Inc. (Michigan)
23. Delphi International Holdings Corp. (Delaware)
24. Delphi International Services, Inc. (Delaware)
25. Delphi Liquidation Holding Company (Delaware)
26. Delphi LLC (Delaware)
27. Delphi Mechatronic Systems, Inc. (Delaware)
28. Delphi Medical Systems Colorado Corporation (Colorado)
29. Delphi Medical Systems Corporation (Delaware)
30. Delphi Medical Systems Texas Corporation (Delaware)
31. Delphi NY Holdings Corporation (New York)
32. Delphi Services Holding Corporation (Delaware)
33. Delphi Technologies, Inc. (Delaware)34. DREAL, Inc. (Delaware)
35. Environmental Catalysts, LLC (Delaware)
36. Exhaust Systems Corporation (Delaware)
37. Packard Hughes Interconnect Company (Delaware)
38. Specialty Electronics, Inc. (South Carolina)
39. Specialty Electronics International Ltd. (Virgin Islands)

24 Other Freaks Said:

At 9:42 PM, Blogger watbull said...

Unions. I hate unions. Always have. This is what they're good for... perfect example.

P.S. Cute what you did with the pointer arrow!

At 10:52 PM, Blogger Patrick Joubert Conlon said...

Excellent, Sarah!. Spoken like a true capitalist. Like Beth, I hate unions. I had to join one to work in pharmacy in England and they were a bunch of damn commie slackers.

At 8:19 AM, Blogger Ed Abbey said...

In ten years of being in the business world, I have twice lost my job to overseas competition. It sucks and as an engineer, I doubt that I will ever feel secure in a job like I once did.

I have mixed emotions on unions. The company I work for has a union for those who work on the floor and they are a very hard working bunch and aren't constantly demanding raises and such. They symbolize what a union should be. However, I don't think most unions are like that and are constantly demanding more for less. On the other hand, places like Wal-Mart who are taking advantage of their employees and spend millions on busting unions while continually encouraging the flow of American jobs overseas, deserve a union. Costco, a competitor of Wal-Mart, makes almost twice as much money per store as Wal-Mart and focuses on buying American and retaining American jobs. They also treat their workers a heck of a lot better.

At 9:47 AM, Blogger Eddie said...


You are way nicer to unions in your post than I ever would be. I can't tell you how happy I am that Delphi is going under. If the baby unions can't get their way, they don't deserve to work or get paid for it. Unfortunately, tough love is the only thing that will make these unions learn. They need a swift kick in the ass like they are getting and will get soon at GM.

As for Wal-Mart, Wal-Mart has done more for low income and the poor in our society than any union has ever done. I have known people personally who worked at WalMart and absolutely loved it. So I don't know what the guy above me is talking about.

Let the unskilled jobs go overseas so I can buy my microwave for $30. The economy shows signs of maturity when it sheds overpaid unskilled labor. I need to buy a bumper sticker on my car to protest the one's I see from time to time, "Union NO WAY," instead of Union Yes.

At 9:48 AM, Blogger Eddie said...

PS. Wal-Mart and Costco have entirely different business models. That's like comparing apples to oranges.

At 10:29 AM, Blogger Assorted Babble by Suzie said...

Recently, I heard the low percentage of people that are actually saving money and it was staggering.

I believe in "Rainy Days" and have taught my children, but for some reason most people's expenses are more than their income....that is crazy to me.

At 10:32 AM, Blogger Bstermyster said...

Eddie, you are right, I am being nice to the unions. Only because I could start a rant that would last a long time. I am trying to give my hubby the chance to write on this issues because he knows how these people really operate since he has to sit in on the negotiations with the union presidents. This subject is something he wants to explain from is point of view. I HATE UNIONS. This post is more to explain briefly why it is important for Delphi to reorg.

At 10:44 AM, Blogger Ed Abbey said...

Wal-Mart has done more for low income and the poor in our society than any union has ever done?

Here are a few Wal-Mart statistics that are readily available:

* The 2003 poverty line for a family of three was $15,260. In 2003, sales associates (the most common job at Wal-Mart) earned an average of $8.23 an hour for annual wages of $13,861. (Business Week, 10/6/03)
* Sales clerks at Wal-Mart earned an average of $8.50 an hour, or about $14,000 a year in 2004 -- $1,000 below the poverty level for a family of three. (New York Review of Books, 12/16/04) Many low-wage Wal-Mart employees qualify for public assistance.
* Wal-Mart employees must pay 33% of their health insurance premiums (compared to a national average of 16%) -- and then pay deductibles of $1,000 a year.
* Wal-Mart reports that its health insurance covers only 48% of its 1.2 million U.S. employees. On average, large U.S. firms (100 or more workers) cover 68% of their employees. If Wal-Mart were to reach the average coverage rate, it would cover another quarter-million-plus employees. (Kaiser Family Foundation & Health Research and Educational Trust, 2004)
* An analysis by the Massachusetts Department of Health and Human Services found that in 2003, Wal-Mart covered only 52% of total health care premium costs compared to K-Mart which covered 66%, Target which covered 68%, and Sears which covered 80%.
* US taxpayers provide medical insurance for many Wal-Mart employees who cannot afford or are not eligible for the company's insurance. California, for example, spends $86 million each year on public assistance for Wal-Mart workers, including $32 million on health care. (Hidden Cost of Wal-Mart Jobs, UC Berkeley Institute of Labor Relations, August 2004) In Georgia, over 10,000 children of Wal-Mart employees rely on state-funded health care. (Atlanta Journal Constitution, 2/27/04) In Tennessee more than 9,000 Wal-Mart workers -- one-quarter of the company's total employees in the state -- are enrolled in the TennCare low-income medical program. (Chattanooga Times Free Press, 1/20/05) In Alabama and at least seven other states, Wal-Mart tops the list of the state's largest employers whose employees receive publicly funded health care.
* Wal-Mart has received over $1 billion in subsidies from state and local governments. This money could be used for education and other public services. ("Shopping For Subsidies: How Wal-Mart Uses Taxpayer Money to Finance Its Never-Ending Growth," Good Jobs First, May 2004)
* A Congressional report estimates that every 200-employee Wal-Mart store costs federal taxpayers $420,750 a year: $36,000 for free and reduced school lunches; $42,000 for housing assistance; $125,000 for federal tax credits and deductions for low-income families; $100,000 for Title 1; $108,000 for the federal share of state children's health program costs; $9,750 for low income energy assistance (Committee on Education and the Workforce Democratic Staff, U.S. House of Representatives, 2/16/04).
* Wal-Mart employees were eligible for $2.5 billion in federal assistance (paid for by American taxpayers) in 2004. (Harper's Magazine, 3/2005)

At 10:52 AM, Blogger Eddie said...

Ed Abbey,

I went to College right next to a Wal-Mart, I speak from personal experience and everyone around me. You speak from a text book.

At 10:54 AM, Blogger Eddie said...


My company has a few union nursing homes and I can speak from a financial perspective that their benefits and pay aren't any better than our non union homes (most aren't unionized and they never suceed to organize b/c who would want to accept the same compensation and pay heft union dues?)

All the unions exist for is to perpetuate the existence and power base of their leaders and the Democratic party.

At 10:55 AM, Blogger Ed Abbey said...

So personal experience trumps hundreds of professional analysts who do these types of studies for a living? Hard to argue with that logic.

At 10:56 AM, Blogger Ed Abbey said...

"PS. Wal-Mart and Costco have entirely different business models."

My point exactly!

At 10:58 AM, Blogger Eddie said...

Ed Abbey,

All of your points above are moot because:

A) You could say the same about lots of businesses, especially fast food
B) I don't think the government should be shelling out a DIME for any of the programs above listed for ANYONE.

At 11:00 AM, Blogger Eddie said...


Do you really want me to go point over point and dispute everything you say? These are obviously people with a hefty bias. It's people like you who degrade valuable work experience like mine in high school at McDonald's where I was paid $4.25 an hour with chance for advancement if I so choose.

I have seen how lazy some of these people are. I have also seen how well the motivated one's are and how fast they moved up the ladder.

At 11:01 AM, Blogger Eddie said...

By the way, Mr. Abbey, these "professional analysts" who you say do these studies are all union-paid hacks!

At 11:15 AM, Blogger Ed Abbey said...

You might be surprised but I do agree with you on quite a bit of what you said. I don't think the government should be shelling out the money but they do anyway. Since my political views aren't being represented by the government where welfare is concerned, I find it easier to go after those that put people there in the first place. (Assuming welfare isn't a choice.)

I think fast food companies are different because they aren't sending jobs overseas as a result of their business practices.

I haven't degraded anybody who works at Wal-Mart or McDonalds. I don't know where you got that from. I have been at the bottom too and like you, know what it is like. I have however, degraded the owners of Wal-Mart who have taken Sam Walton's excellent business model and crushed it beyond recognition.

I am not pro-union in 99% of the cases I have seen for the reason you stated, i.e. lazy and might I add greedy. But in Wal-Mart's case, I would make an exception.

At 7:29 PM, Blogger madman said...

HEY--I agree with you! I was in a Teanster 25 years ago. The company told us if we voted to ask for higher pay they would just shut the company down and move out of state. We voted to ask for higher pay! GUESS WHAT THEY DID? I had to find a new job.

At 1:08 PM, Blogger T.O.E. said...

does anyone know why the companies that have unions don't want them anymore (or never did for that matter)?...it's because they want more money in their pockets(duh)...but they already have more money than they will ever use in their or their childrens lifetimes, but they need more, MORE MORE!!!...now where is the greed?...everything they own is paid off...do you think the same applys to the workers that are doing the actual work?...not even close...my wife works for an orthadontist...her along with all the girls in the office put the braces on and make all ajustments...who sits in his office and makes a cool couple mil a year?...he diserves his cash, he worked(went to school) hard for it...but it's only fair that the people making the products or doing the work for ANY company get paid fairly to do it...i am in a union, and i'm glad i am...i am a hard worker and deserve what i get paid...i cannot say that for all, and am a bit ashamed of what the union has come to represent...there is no exageration, most of the union is made up of lazy pieces of shit...and the union will defend them...sad sad sad...but the truth of the matter is, that if it weren't for the union, none, and i mean NONE of us would be where we are today, union employee or not...very true example, i saw a bumper sticker the other day, it was awsome and 100% right on the money..."the weekend: brought to you by the union"...argue with me if you'd like, but i promise you, there is at least one thing your job offers that the union fought for and won for the people back in the day that is now a standard of the job industry...

At 2:03 PM, Blogger Eddie said...


Glad you are proud of yourself but where I work, I assure you, the only thing our union nursing homes "get" that our non union homes "get" are big fat union dues.

The whole point of the post was Delphi was going into debt and couldn't compete with their compensation structure, but the unions didn't care and now they declared bankruptcy and will likely have the union pension plan gone forever. Until you have a chance to run a business and see how hard it is, you really don't have a complete perspective. Ed

At 2:41 PM, Blogger Ed Abbey said...

t.o.e. said, "does anyone know why the companies that have unions don't want them anymore (or never did for that matter)?...it's because they want more money in their pockets"

Profit is not a dirty word and everyone is entitled to a return on their investment. Going bankrupt for the sake of their workers doesn't do anybody any good.

At 9:23 PM, Blogger Three Score and Ten or more said...

As an old fart who has, to this time belonged to (I can't remember all the acronyms) the boilermakers and steamfitters, the sheet metal workers, the teamsters, the(whatever in heck the name of the signal workers on the UPRR had to join), AFTRA, AGVA, and Actors Equity (the last three are in the entertainment busines), The Idaho Educations Association, The New York Education Association and a few others that I can't remember I have mixed feelings about Unions. Whoever made the post about weekends free was right. Unions created sanitary, safe situations for workers of all kinds. On the other hand trying to practice an entertainment craft outside union perview can make one feel physically threatened. I remember my father (dyed in the wool union member and yellow dog democrat) coming into the house after a day at work cursing because a union rep. reproved him for working too fast and too well. Ihave been laid off from a union job because the union wouldn't deal honestly with the employer. I am not sure that my feelings about unions are a bit like my feelings about liberals. I think they have a place and can serve our country well when there is enough active opposition to keep them from driving the country right over the cliff.

At 10:10 AM, Blogger Patrick Joubert Conlon said...

Three Score, Unions (and liberals) did once serve a useful purpose IN THE FIRST HALF OF THE LAST CENTURY but they have outlived their usefulness.

At 11:54 AM, Blogger Eddie said...

Well put, Patrick. The good news is, they are running themselves out of business anyway. The private (productive) sector of the economy is only about 8% unionized and that number declines yearly. Non-union companies are taking over entire industries, especially airlines and autos, as consumers can't afford to purchase the over priced union made goods and are choosing non union goods and services with their wallets. Really, this problem is just taking care of itself. Unfortunately, it's hurting a lot of people in the meantime who don't understand economics and finances.

At 12:00 PM, Blogger stuffle said...

Little late to the party, but hey...

when people have been paid 25-50$ an hour for a job that can be done overseas for 8$ an hour there is a problem

Amen to that! The job doesn't even have to go overseas. Companies that want to stay in business are finding ways to get out from under the crippling wage a pension deals of the past. If it means filing Chapter 11, then more power to them. I pray that they emerge stronger than before.

I highlight pension above as that is often the most crippling liability that a company will have, and the sooner companies can dump those, the better. Wages often get all the attention, but it is some of these insane pension plans that some companies are strapped with that are the true evil. I am all for employees saving for their own retirement (just like I do).

As for Wal-Mart, my experience, which includes family members, is the same as Eddies. Of course, these jobs should be treated as what they are, and that is simply secondary income type jobs or part-time student jobs, not the type of job one should be trying to raise a family on (at least not the bulk of the Wal-Mart type jobs).


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