<VV> Delphi (AC Delco) declares bankruptcy (NO CORVAIR)
NicolCS at aol.com
NicolCS at aol.com
Sat Oct 8 14:51:52 EDT 2005
Boy, this is some sad news...
(Exceprted from Automotive News today)
"Delphi Corp., hurt by high wage and benefit costs inherited from former
parent General Motors, put its U.S. operations into Chapter 11 bankruptcy
Saturday. Delphi's filing is the largest ever in the auto industry, dwarfing
Federal-Mogul Corp.'s 2001 filing. The company employs 185,000 people worldwide.
Delphi, the nation's largest auto supplier and the world's second-largest,
filed for Chapter 11 bankruptcy protection for itself and 38 U.S. units in U.S.
Bankruptcy Court in New York. Non-U.S. subsidiaries were not included in the
Delphi has struggled since GM spun it off in 1999, posting net losses of $741
million in the first half of 2005 alone. It had sought financing from GM and
sharp cuts in wages and benefits from the UAW to restructure unprofitable U.S.
Delphi said it expects to make substantial cuts in its U.S. manufacturing
operations. Delphi plans to finance its operations with $4.5 billion in debt
facilities, plus other committed and uncommitted financing lines.
Delphi's bankruptcy is among the 15 largest since 1980, according to the
BankruptcyData.com Web site, based on total assets of about $16.6 billion at the
end of 2004.
Delphi's hourly wage of $65 an hour including benefits is uncompetitive, and
a jobs bank that pays idled workers 95 percent of their wages is costing the
Michigan supplier about $400 million this year.
Delphi had been seeking substantial relief from GM and UAW. With the Chapter
11 filing, those two parties have lost their power to control events. The
bankruptcy judge is now empowered to strip union benefits and force parts price
increases on Delphi customers.
Hourly workers now face uncertainty on their future wage rates and health
benefits and the future of their pensions. Current retirees also face questions,
because Delphi can cancel its pension plan. In that case, the plan would be
run by the Pension Benefit Guaranty Corp., a federal government agency that
takes over failing pension plans.
The UAW faces a massive loss of dues-paying members.
Current shares of Delphi will most certainly be worthless, since companies
almost always cancel stock in a Chapter 11. That affects employees and retirees
who were granted or invested in Delphi shares.
The UAW rank and file, riled by contract changes, could stage work stoppages
and slowdowns. That could cause supply interruptions not only to GM but the
entire industry, says Sean McAlinden, chief economist for the Center for
Automotive Research in Ann Arbor, Mich."
Shows what happens when you put too many carts on the horse. This really
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