OFF TOPIC: Car Parts Maker Moves to Break Its Union Deals

[Marika]

The New York Times

April 1, 2006

Car Parts Maker Moves to Break Its Union Deals

By MICHELINE MAYNARD

DETROIT, March 31 — Delphi, the nation's biggest auto parts maker, on Friday asked a federal judge for permission to throw out some of its labor agreements, a move that could cost 20,000 union workers their jobs and leave thousands of others with less than half their current wages.

Delphi, which is operating in bankruptcy, wants the judge's permission to impose sharply lower wages and benefits on six unions, setting up a confrontation that its largest union, the United Automobile Workers, said could lead to a lengthy strike.

A strike could also cripple General Motors, which spun off Delphi in 1999 and remains its biggest customer. And any harm to G.M. could eviscerate the U.A.W.'s own influence as one of the nation's most socially progressive and powerful unions, while accelerating the slide of the American auto industry.

Delphi said it would close or sell all but 8 of its 29 plants in the United States and cut 28,500 positions around the world. Beyond the 20,000 of its 33,100 hourly jobs in the United States that Delphi plans to cut, another 8,500 salaried jobs worldwide are to be eliminated.

"I took this job thinking this was my future," said Tracey Huffman, 37, staring blankly down at a table at Jamins, a pool hall next to the U.A.W. Local 651 hall on the east side of Flint, Mich. "Now I don't know. It's like starting all over again."

Ms. Huffman, who is scheduled to be laid off temporarily at the end of April, now fears that her layoff could become permanent. Any decision by the judge, however, is expected to be weeks or even months away.

The confrontation promises to become even more fierce in coming months, as G.M. tries to extricate itself from its worst financial crisis in over a decade, and the U.A.W. fights Delphi over the deep wage cuts that it wants to impose.

All sides could be losers. A strike by the U.A.W. could send G.M. into bankruptcy alongside its former parts unit, a fate that would be an even bigger debacle for the union and the industry than Delphi's bankruptcy has proved to be.

And unless a judge rejects Delphi's effort to abrogate its contract, the U.A.W. faces the prospect that it can no longer give its workers the security it has fought for years to provide, leaving the union's president, Ron Gettelfinger, distressed.

Already, some workers at the Delphi East plant in Flint left their plant in tears Friday, after learning that it was among 21 that would close. In 1998, a seven-week strike at that plant and another in Flint, nearly crippled G.M.

"I have to put my faith in the union," said Judy Steyer, 36, who dabbed her eyes as she walked on her lunch break.

Wearing a black sweatshirt embroidered with the U.A.W. crest, Mrs. Steyer continued: "I've been through one strike. It was tough then, and it'll be tough if we go on strike now."

David L. Gregory, professor of labor law at St. John's University in New York, said, "This is really for all practical purposes a frontal challenge to the reason for existence of the U.A.W."

The tangle comes as the American industry already faces stiff competition from Asian and European companies, which have wrested market share in automobiles and auto parts from their American rivals.

G.M., which lost $10.8 billion last year, is struggling to reverse a slide that has deepened under its chief executive, Rick Wagoner, while Delphi is one of half a dozen major American parts suppliers that have been forced to seek Chapter 11 protection.

G.M. has already stepped up several times to help Delphi, most recently last week, when it agreed to pay for bailouts covering 13,000 Delphi workers, in addition to 113,000 of its own, and to take 5,000 Delphi workers back to G.M. On Friday, Delphi said it hoped that many of the workers who will lose their jobs will have a "soft landing" because of the G.M. program.

This is going on, Professor Gregory said, while companies like Toyota, which is expected to earn $16 billion for the year ended Friday, are prospering and even building plants across the Midwest and South that are employing tens of thousands of Americans.

"The 20th century was the century of General Motors and America," Professor Gregory said. "The 21st century is going to be the century of Toyota and Asia."

While similar actions have occurred in the steel and airline industries, Delphi's move was the first time that a major player in the automobile industry had sought to void its labor contracts, setting the stage for a precedent-setting court ruling later this year.

Delphi plans to eliminate 21 factories in Michigan, New Jersey, Mississippi, Texas, Alabama and elsewhere.

"Emergence from the Chapter 11 process in the U.S. requires that we make difficult, yet necessary, decisions," Delphi's chief executive, Robert S. Miller, said in a statement Friday. "These actions will result in a stronger company with future global growth opportunities."

Once Delphi is finished with its restructuring, it will have a much more streamlined product line than the current wide array of components — from air-conditioning systems to steering gear to cruise controls — that it inherited from G.M.

Under Delphi's contract, which is essentially the same as the one covering workers at G.M., members of the U.A.W. are paid nearly $28 an hour in wages. Their total compensation, including pensions, health care and other benefits, is an average $78.63 an hour, Delphi said in court documents, a figure it said was three and a half times that at competing parts suppliers.

That number, however, struck analysts and union officials as too high; they generally estimate total costs to be about $67.

In its court filing, Delphi said it wanted to impose its last offer, which it made a week ago. That was for a $5-an-hour wage cut this year, to $22, followed by another cut next year to $16.50 an hour. To ease the pain, workers would be given $50,000 each, presumably provided by G.M.

If workers do not accept that deal — or if G.M. does not come up with the money — Delphi said it would impose a unilateral cut in wages to $12.50 an hour.

Though less than half what they make now, that is still more than Delphi's original offer to the U.A.W., made shortly after its bankruptcy filing, for wages as low as $9.50, a proposal that ignited outrage among union members.

The U.A.W. earlier this week rejected essentially the same proposal Delphi now wants a judge to approve, saying its members would surely vote it down. If those terms are imposed on the union, "it appears that it will be impossible to avoid a long strike," U.A.W. officials said.

Robert Betts, president of U.A.W. Local 2151 in Coopersville, Mich., home to one of the plants that Delphi intends to close, said the issue went beyond the parts maker.

"This is turning from a restructuring of a business into a basic struggle for workers' rights," he said. "Essentially what they want you to be is a very poorly paid indentured servant."

He added: "If we accept too low of a wage, it will affect workers everywhere."

Knowing the ramifications, bankruptcy court judges encourage labor unions and companies to reach agreements, rather than have lower rates imposed upon them. A hearing in the Delphi case is set for May 9, and the situation may not be resolved for weeks after that, allowing plenty of time to reach a deal — if the parties talk.

A number of unions in the airline industry have reached agreements with bankrupt companies in the last few years.

The U.A.W., however, has never been in this position with such a large company. And labor experts said it would be politically impossible for Mr. Gettelfinger to agree to all of Delphi's demands, because that would set a precedent for even more critical talks next year with G.M. and Ford.

Delphi has been included in the union's practice of "pattern bargaining," which essentially calls for the same terms at each company. Cuts granted at Delphi would open the door for the automakers to demand lower wages and benefits as well.

Although it has agreed to some modifications, particularly changes in health care coverage negotiated at G.M. and Ford last year, the U.A.W. has not granted pay cuts at a major auto company since it agreed to concessions with Chrysler in 1979 as part of its bid for a Congressional bailout. Those cuts were later restored.

Given that a strike is its only — and most lethal — weapon, Mr. Gettelfinger has to appear as if he is ready to wield it, experts said.

"There's always a lot of posturing," Ms. Steyer, the Flint auto worker, said. "It's like two big dogs. You growl, and I'll growl back."

But people in the union and in the auto industry who are acquainted with his thinking said Mr. Gettelfinger was loath to call a broad strike at Delphi, knowing it could lead to a bankruptcy at G.M. and an even bigger morass for the union.

That would not prevent him from strategic strikes, at a plant or two, if he felt it was necessary to send a message to Delphi, these people said.

Mr. Gettelfinger's reluctance to inflame the situation is a reason the U.A.W. has not conducted strike votes at any local unions, a formality that occurs before any walkout.

Quentin Garland, a 32-year veteran at the Flint plant who assembles cruise control mechanisms, said he understood the union's quandary. "A strike at this point doesn't help anyone," Mr. Garland, 51, said.

But Sue Gosner, 50, said she did not plan to wait around to see if that happened. She recently reached the 30-year mark that will allow her to retire with a $35,000 check from G.M.

"It's just been such an emotional roller coaster for so long now," Ms. Gosner said. "People just go in there and do the best they can do. That's all we can do."

Jeremy W. Peters contributed reporting from Flint, Mich.,for this article.

* Copyright 2006The New York Times Company

[WarrenJ]

Sad, but unsurprising to members of this forum.

Regards,

Warren

[WarrenJ]

If Delphi workers choose to "walk," GM will find itself without parts. A GM bankruptcy might not be far behind.

Such a suicidal path is not unprecedented in the UAW world.

On the bright side, I don't own their stock.

Regards,

Warren

[mikeal1892]

I feel that they both have to pay way to much money. They have closed the local Gm location here just this week. But these unions force them to pay so much and then thier products cost way to much.

Michael

If all else we all can get our coins together and buy the right to make caddy ourselves with lots of improments ! HEHE The owners know best !!!

[BodybyFisher]

If the unions hold out, Cadillacs and GM cars will be made in China. We are in a global economy. Our standard of living is going to decrease as a result of congress not creating a level playing field. US companies don't have equal access to foreign markets. Just like we don't stringently enforce the laws on the books in dealing with illegal aliens and immigration, the US never acts on the imbalance of trade, lack of environmental laws in other countries that we are importing from, copy write infringement, and slave wages. We are unable to compete with that imbalance. But we are all paying high prices for NIKE'S made in factories where companies provide poor wages, work environment and benefits, enjoy those NIKE'S. GM and FORD are just higher on the food chain and soon American cars will be made elsewhere. Jobs are leaving the US that can easily be done elsewhere due to technology.

Labor is one of the three factors of Production (land, labor and capital). US workers are being sold down the river. The tone of this thread was one of upset, surprise and how dare they break a contract. Those 'contracts' were made when GM had major market shares, when they made money hand over fist and the contracts were made to keep the money flowing. Things have changed and GM's market share has dwindled. The US was slow to react to smaller fuel efficient vehicles. Plodded along building boring cars in the 80's while losing market share and prestige. It use to amaze me at when I saw a TV commercial for a foreign car touting excitement when the US car ad was dull and boring. Some know it alls will say, WELL build a better car, etc. They do build a good car, their COSTS are too high to compete with CHINA, KOREA, JAPAN production. I hear employees at Delphi and GM are making BIG bucks even before benefits are factored in. The unions will either break and drop wages or the next step will be that the jobs will be GONE overseas, or GM will go bankrupt. Things have changed. I still do believe the statement, How GM goes, so goes the country. Write your congressman, we can't stop the global economy, but we can work on having them enforce a level the playing field in JAPAN, CHINA and KOREA and anywhere else we import from where the jobs compete with US jobs. The thing that upsets me however is this..... What won WW2? Our manufacturing capability won WW2. Our manufacturing capability has been sent elsewhere and has been decreasing since WW2. Now China with its BILLION people is becoming a super power, they are sending a man to the moon in 10 years. They are stealing and buying our secrets (do some research). We have no direction as a country, every four years or so we send a new bunch of clowns to Washington, who is guarding the gate? In the 80s, the government bailed out Chrysler..... Bush (who I am a fan of), scoffed at the idea of helping GM, I think he said "build better cars". He COMPLETELY doesn't understand what is going on with that statement, it was idiotic. Its HIS duty to give US companies a level playing field and to KNOW how damaging our trade practices are. Yet we worry about the SEMANTICS and call terrorist survalance.... SPYING on US citizens for politics while very important things are being overlooked. CLOWNS I say...CLOWNS the whole lot of them.. They are playing with themselves. Within 15 years CHINA will CLONE our PASSENGER JETS and sell them back to us cheaper, watch...

Labor

All human actions, or at least all conscious human actions, have their source in desire and their end and aim in the satisfaction of desire. Exertion is the intermediary action by which desire secures its aim in satisfaction. The economic term for this exertion is labor. It is the active, and from the human standpoint, the primary or initiative, factor in all production -- that which being applied to land brings about all the changes conducive to the satisfaction of desire that it is possible for man to make in the material world.

In political economy there is no other term for this exertion than labor. That is to say, the term labor includes all human exertion in the production of wealth, whatever its mode. In common parlance we often speak of brain labor and hand labor as though they were entirely distinct kinds of exertion, and labor is often spoken of as though it involved only muscular exertion. But in reality any form of labor, that is to say, any form of human exertion in the production of wealth requires the human brain as truly as the human hand, and would be impossible without the exercise of mental faculties on the part of the laborer.

Read about the Three Factors of Production

http://www.henrygeorge.org/science/speIII_10.htm

[Bill K]

The Big 3 had to copy the Japan during the fuel crunch in the 80s and build smaller cars.

Looks like they will have to copy them again in order to remain in business.

I have contended that NAFTAs ultimate goal was to break the Unions and its getting closer day by day.

[gygmy]

Capital does not care about the enviroment, it does not care about the wellfare of humanity, it is only concerned with a good return on investment. It is the overiding global modern religion to many powerful people. Is it good? No. It shall be our ruin if we do not talk about it and change the direction we be going in.

[Ranger]

Global economy & NAFTA not only will bring the other countries economies and wages up, but will also bring ours down til equalibrium is reached. The unions are not in a barganing position, but more of begging position. The auto industry need only look at the airline industry to see it's future, and it is not pretty. The unions can choose to fall on their sword if asked for too much (Eastern Airlines). I think the writing is on the wall.

[caddypete]

Unions have outlived their usefullness years ago.All they have done in the last decade is forced businesses and employees out of work.A auto worker without a college degree costing 70.00 per hr is not going to say the hell with it all I'll just go get a new job because he will never find one at that wage with his talents.The union killed the golden goose, why open a bussines putting up millions of dollars and give all the money plus some to the employees?There is not any reason to do so,therefore they move to other countries to make a profit, remember profit? it is not a bad word, it was a incentive to open a bussiness, employ americans give them a fair share and put some money back in your pocket.The unions decided why does the owners make all the money when the employees do all the work?without employees the owners make nothing.Well they forgot the other side, without owners who needs employeees,and without a profit who wants to be an owner.

Somewhere this downward spiral has to stop before there are no American companies left,in the end employees will have to work for someone and accept the pay they get, whether it is American or whoever buys them out of default why not make the consessions now and keep the american companies?

[Ranger]

Don't just blame the unions. There are many companies without unions that are gone because they couldn't compete with $1 or $2 an hour labor rates of Taiwan, Mexico or where ever. When would you like to make your consession to that level?

[caddypete]

Don't just blame the unions. There are many companies without unions that are gone because they couldn't compete with $1 or $2 an hour labor rates of Taiwan, Mexico or where ever. When would you like to make your consession to that level?

As soon as I make 70.00 in wages and compensation an hour,with no more than a high school education

I will take a 50% cut in pay.Heck I would take 22.00 an hr, pay 1/2 my insurance and no retirement, And just match 10% of my 401Kcontribution and no uniun dues.That is way better than unemployment and welfare

[gygmy]

Because peoplel could join together and say, "We will not work any longer under theses conditions," we, all of us have much better living conditions. History, reality, forces me to believe this. I am for the most part a pragmatist. The idiologs who go for that total free market schtuff, bug me, there is alot of other influences working here besides dead beat labor and exploitative capital. What a wonderful mix o schtuff we a'int figued out yet but we get all caught up in red and blue , left and right, but do we want the same thing? Yes! A Cadillac STS V8 in our driveway. And boy, do I have to sayyy goodnite...

[mhinchley]

No, that is not a good thing. Unions help build this country and the Big 3 among many other workring careers. Uhm.........have you priced a new car lately? Do you think if they were allowed to pay $9 per hour that they would say, "Hell, let's drop the price of each car by $20,000! Blue collar workers, without a degree have always been and always will be the backbone of the country. Uhm most of those high paying office jobs are only there because of the work the lowly blue collar guys are doing. Let me count if GM goes out of business..............how many College Guys will be out of work as well........within GM, Suppliers, Subsidaries.........etc. So all those college guys better also hope that does not happen. Speaking of the college guys........have you seen the bonus given by GM and the overall auto industry in a year? 5 million here, 4 million there, 3 million in stock options. Please............they are nothing but pencil pushers who are making a fat living off of the people manning the plant. And all of these college-less guys are not morons are some of you are implying. I myself am a Millwright/Machinist...........and when the engineer comes up with ANOTHER great idea...............I have to sit there and explain to him why it will not work or funtion in real life as it does on his pretty little computer screen. I work on the lines and the machines and I know them. He does not. And if you think I would take a pay cut of even 10 % voluntarily............I would. I would take their cut and their $50k bonus and then find a new job ASAP and then walk out without notice. There are other industries other then the auto industry. Infact, I worked in the auto industry for years (Federal Mogul Power Train Division), and got out because it was to volitale. Now I work through the Millwright Union which pays journeyman $32 an hour and retirement after 25 years averages $4000 a month.

But someone has to install all those machines and take them from paper to real life functionality. And them guys sitting at them desks are not capable.............trust me. They would kill theirself the first day. And then someone has to run them machines. See, the office guys have no job if plant is not running, and running efficiently. Try getting a group of guys to keep everything running who cannot even pay their bills with their salary. Not too worried about getting fired if you can't pay your bills. And things are much more technical today. You are not just sticking in a part and taking it out. Someone running a line has to be able to program/edit machine programs, program/edit robot programs, diagnose minor mechanical issues, repair machine and robot crashes, inspect parts for defects.........etc etc. It is not a $9 an hour job. I could see $18-$20 an hour for the operators, but no less. Somebody working in a multi-billion dollar industry should be able to afford to own a home, a nice car, go on a vacation once a year. And $20 dollars an hour is less then $42k a year. Not like they are making a fortune. Benefits? Well you have to be able to retire and you have to have insurance. That is something our wonderful government should fix, either mandating certain coverages a company has to pay or to develop a government universal program. But we all see how well social security is working. Not to mention the cost of a Doctor visit. Oh yeah, you have a running nose, a cough, here take 2 of these and come see me in 3 days so I can charge you another 200 besides the 200 I am charging you today. Not to mention.........real smart of the Auto Makers expecting their workers to not even be able to afford to buy one of their cars! Who the hell do they think will buy them when the Unions are gone? Real smart there. No one making $9 an hour will be buying a new car. Talk about the economy crashing completely...............that will do it!

[mikeal1892]

I dont think Cadillac would ever be the same if it we to end up being built some where else. I consider myself to be a proud American so I drive the very best that our people build. If that were to happen though I would at some point just go to a Jag or an Merecedes. My whole family done just that, but its a great old brand that I have alot of respect for. I'm starting to think that very hard times are about to hit us. I work within the real estate buisness as well as own a part of an auto shop. but with the real estate its starting to go belly up. everyone says sell now . However we are not seeing many new listings in the mls this spring its considerably slower I'm going to sell my 200k home and find myself something I can pay almost cash for because I think its coming.. People always wana know how much money they can spend not what they can get for a 1/2 or 2/3's of the price and work on. Most likey like a double wide for about 70k out in the country on some land and then I can fix it up ! Most of the Cadillacs I have bought but not all needed some work and I still was a few coins ahead of the game.

Michael-

[gygmy]

I am not bashing the labor movement in the world. Unions have made this a better place for everyone. They are necissary as a counterbalance to the overwhelming control that concentrated wealth has apon society. The democratic and republican or parliementary forms of government would be destroyed under uncontrolled capitalism. What I am seeking is a debate on how we can have a good and decent society under capitalism and retain our liberty and dignity, if a person does not happen to be a person of the "capital" class. I am worried that GM may go into bankruptcy. It would be a terrible blow to this nation on many levels. One another scene, did anyone see 60 minutes tonite? I had the show on but had to put it on mute to take a phone call and I saw that, what it seemed too be, giving little sneek peeks at the new Caddy"s. Any info on that?

[Ranger]

"MAY go into bankrupcy"? I think the writing is on the wall. Yes I saw 60 minutes. Wagner was trying to put a good spin on things but it was not hard to read between the lines. As I said, the auto industry need only look at the airlines to see their future. 60 minutes agreed and almost quoted me. It will be another sad day for this country. I wonder where it will all end?

[gygmy]

Is it a race to the bottom when it comes to labor costs? Should we have to compete with undemocratic contries? I do not even Know through our 'free' press how much these issues are being debated by our representatives. It can make one blue.

[WarrenJ]

Capital does not care about the enviroment, it does not care about the wellfare of humanity, it is only concerned with a good return on investment.

Simply put, capital goes where it is treated best. That's all.

Regards,

Warren

[gygmy]

And that is not always in somebody's best intrest.

[mhinchley]

What really surprises me, is that some new QUALITY but smart car maker does not pop in right now. It is prime time for someone to make a fortune. Someone like Trump or something. Think about it. The big 3 are all in deep crap. They are forcing suppliers to lower their prices more then they already have over the past several years. They have forced many of them into bankruptcy by the squeeze. Alot of the money the big 3 is paying out now is to retirees in pensions and benefits. Not to mention the bonuses they are paying for early retirement. See, someone new could start a quality US car company right now and not have any of them costs. Therefore they could pay a good wage with adequate benefits (rather then over the top) because it would be all they had to pay. And if they were smart and lightened a bit on the technology (too many computers, air suspension, heated seats, etc) that is costly and unnecassary and just focused on building a quality car..............they could sell the cars much cheaper then they currently are priced at. But they would still make a FORTUNE for years, if not decades to come. They big 3 are too weak to stop them, if they came in and did it right. If only I were a billionaire............

[mhinchley]

Is it a race to the bottom when it comes to labor costs? Should we have to compete with undemocratic contries? I do not even Know through our 'free' press how much these issues are being debated by our representatives. It can make one blue.

They are not even going over seas. Because it costs too much money to ship the parts by sea over here...........and it takes too long. They are all just moving factories to Mexico. Many of the suppliers have been forced to move some, if not all of their business there so they could have cheap labor and stay in business. And not that it is only the auto industry, but that is what I am familiar with. Fed Mogul for one, who is in Bankruptcy and closing plants...........moved part of their Powertrain Division there. Closed a Georgia Plant and moved most of that there as well. Probably won't be long and

the South Bend plant will end up there. But GM and Ford are both squeezing them even more..........so they may not make it anyway. The whole auto industry is dying here due to the Domino Effect. Even the steel mills are having to compete with their prices to get the Big 3 to buy their steel. Yet the Fed keeps raising interest rates............as if all is well. Almost as if they think they are fooling everyone! Not me. I am definately worried. I got rid of my car payments and paid cash for these 2 cars. And am looking to get rid of as many monthly payments as I can, as fast as I can.

[Dan]

The big 3's problems go much deeper than Unions. Yes, it's hard to for them to compete against foreign competition that does not deal with Unions, but the key thing is product. Toyota pays it's workers much less, and offers fewer benefits, but offers a surperior product, that is if you believe the JD power quality ratings. The reason GM is suffering is beacuse they don't offer the same quality as the Asian competition. To stay in business GM can't just equal the Japanese, they have to beat them. Why? Because perception often trails reality. Toyota has become so ingrained in American society, that I even see silver hairs driving Avalons, and rednecks driving Tundras and Tacomas. GM has a long hard road ahead of it. The only way I see them surviving is to declare banruptcy so at least they can get their labor costs in line with Toyota. They also have to stop outsourcing to third world countries like China. The quality level of the labor in those countries is simply not acceptable when compared to more mordern countries. I believe that GM should assemble each car in the region it will be sold in, so that they can make nice with the various governments, get tax breaks, get around tariffs, import quotas, and offer postive PR for the company. After all, in the consumer goods market image is everything.

[caddypete]

Dan hit the nail on the head, I put the blame on unions, and many believe I want to go into a wage cutting war with other countries and bring down American living standard.To compete means to better the compition.With unions setting the wages across the board there is no compition,If two men work on the same union line get paid union wages.Man no 1 puts out 70 pcs in a shift and has 1 rejected by quality control,has pride in his work and shows up everyday on time gets his 3% cost of living raise every year.man 2 gets 55 pcs done in a shift 3 of his get rejected by quality control,his attitude is it pays the bills,and misses 20 days a year because of fishing,hunting or whatever gets the same wage and the same cost of living raise there is no incentive for him to improve or man 1 to try any harder. Non union,man no1 would make 3 dollars more,and get a 6% raise,man 2 would make 3 less and get no raise and probably will be looking at the unemployment line soon.the dolllars are the same but employees strive to build a better product and more of them,making the company profitable

[gygmy]

That is wierd, if you work your balls off shouldintnet you be compensated?

[thu]

To screw some parts onto a car, they were getting $70 an hour. Ladies and Gentlemen, that's $154,000 per year (2200 hours per year). That's a lot no matter how you slice it. That's more than the average Primary Care Family Practice Physician makes ($147.5k).