GM Customer Faces Bankruptcy
The front page of today's Sunday August 14, 2005 BUFFALO NEWS featured a story concerning the imminent bankruptcy of DELPHI CORPORATION --- a GENERAL MOTORS subcontractor and customer that employs 4,000 people in the Western New York area --- workers who make an average of $27 dollars per hour in salary plus benefits and retirement pensions. DELPHI makes vehicle electronics systems for GM and was itself "spun-off" from GM on May 28, 1999. The local Western New York plant makes radiators and air-conditioning units for GM automobiles
Currently, DELPHI stock is trading at only $5.56, down from its' 52-week high of $9.63. This represents a 43% decrease in the price of the stock, which is reflective of GM's problems --- which itself is bankrupt.
The Lockport, New York plant currently has 3,200 hourly and 800 salary workers who make an average of $27 dollars per hour, and current negotiations are underway between the UNITED AUTO WORKERS union and GENERAL MOTORS to secure the usual salary concessions and union contract give-backs. According to the BUFFALO NEWS, the plant generated $335 million dollars in wages to the area, along with $2.2 million in taxes and $40 million in capital investments. DELPHI has considered the Lockport plant to be "troubled" since 2001.
"We simply cannot afford to pay $130,000 a year to hourly workers ... the numbers speak for themselves," said bankruptcy reorganization specialist, Robert S. Miller, who oversaw the Bethlehem Steel bankruptcy. DELPHI has lost $747 million dollars so far this year, and has tapped into a bank line of credit to meet payroll.
Under the terms of the 1999 spinoff, GENERAL MOTORS is still liable for $2.7 billion dollars in future pension obligations, plus an additional $6.6 billion dollars in other post-retirement benefits.
Here is the bottom line . . .
DELPHI is looking for a second-tier pay scale of $14.00 per hour, which cuts in half, the current hourly-wage average. The Lockport, New York plant is also offering a $25,000 severance incentive, of which plant management admits they will have difficulty getting people to take the offer.
If a deal is not made by October 17, 2005, between the UAW, the DELPHI management, and the plant workers, bankruptcy court may be where this is all decided. If that happens, then the company will likely ask the federal Pension Benefit Guaranty Corporation to pick up the tab on the retirement pensions of the plants 4,000 workers.
When one reads about a company going bankrupt, please remember that there is always peripheral damage that occurs. In this case, the Western New York area will once again be royally screwed by those who hold NO LOYALTY to no one country --- as our America slips closer to the edge of an abyss from which there can be no return.
The following sources were used in the preparation of this Kentroversy Paper . . .
Pension Benefit Guaranty Corporation
Williams, Fred O. - Delphi's Day of Reckoning May Be Near, Buffalo News, August 14, 2005, pgs. A1 & A2.