GM, UAW Weigh Possible Buyouts Of Some at Delphi

THE WALL STREET JOURNAL ^ | November 15, 2005 | JEFFREY MCCRACKEN

[Brilliant]

General Motors Corp. and the United Auto Workers are discussing the possibility of having the car maker offer buyouts to encourage older workers at Delphi Corp., GM's former parts division, to retire, people familiar with the matter said.

Such a deal could help Delphi, which is operating under bankruptcy protection, pare its payroll and ease the transition to retirement for some of the auto supplier's 34,500 UAW workers. GM isn't under any obligation to buy out Delphi workers, but such buyouts could help reduce the threat of a strike and labor uncertainty stemming from Delphi's bankruptcy filing.

GM is liable for an undetermined amount of pension and health-care obligations for former GM workers who moved to Delphi when the parts unit was spun off in 1999. GM has estimated its liability at anywhere from nothing to $12 billion.

The outlines of any deal are still up for discussion, and the talks could still fail. Any buyout would likely be dependent on GM receiving assurances that Delphi-UAW workers wouldn't follow through with recent threats to strike to protest wage cuts proposed by Delphi management, people familiar with the talks said.

Strikes at certain Delphi plants could force some GM assembly plants to shut down, depriving GM of revenue at a time when it is piling up massive losses in North America and struggling to shore up investor confidence.

Delphi has said it needs to cut hourly wages for union workers to around $10 an hour from about $25 an hour...

The two sides are also discussing the extent of GM's obligation to Delphi's UAW workers and retirees. Under the 1999 spinoff of Delphi, GM agreed to guarantee the layoff benefits, pensions, retiree health care and life insurance of UAW-Delphi workers...

[Brilliant]

This article illustrates how the UAW is killing GM. Delphi is no longer a subsidiary of GM, and as the article mentions, has not been a subsidiary of GM for 6 years. Nevertheless, the UAW insists that the sinking ship that is GM must bail out the workers at Delphi.

And this is despite the fact that the UAW is planning a strike at Delphi while Delphi is in bankruptcy. My view is that the only way to save the US auto industry it to abolish the UAW. I'd start by putting Delphi into liquidation mode, lay off all the workers, etc. That shock might make the workers realize that the union is not helping.

[PCBMan]

The buy-out strategy is nothing new in the auto business. The problem with it is that far too few people ever opt for it, even those near retirement age.

[Brilliant]

In any other industry, they'd just get a pink slip, though. The UAW insists on doing this their way, and that's why the industry is going down.

[tumblindice]

"Labor in this country is independent and proud. Capital is the only fruit of labor, and would never have existed if labor had not first existed. Labor is the superior of capital and deserves much more the higher consideration."

"Thank God, we have a system of labor where there can be a strike."

"Few can be induced to labor exclusively for posterity."

Abraham Lincoln

I find it strange that many argue market capitalism allows any American--whether actor, ballplayer or CEO--to
bargain for his own salary, but would deny this right to the common working man.

[Brilliant]

I don't have any problem with the common working man bargaining for his salary. I have a problem with the common working men banding together and shutting down an industry in order to force the employers to give them higher wages which will ultimately force the company into bankruptcy. Certainly, if the companies got together and fixed their prices, the CEO would go to jail. Why the same rule should not apply to workers who get together and fix their wages is not clear to me.

The only explanation I can come up with is that we need "labor peace." Giving them collective bargaining is a bone to avoid disruption. Unfortunately, though, we're at a point where they are bankrupting the industry. We might as well have the "battle of the overpass." At a minimum, big labor ought to be weakened so that these companies can do what needs to be done to save their own butts.

[Rebel_Ace]

"...I find it strange that many argue market capitalism allows any American--whether actor, ballplayer or CEO--to bargain for his own salary, but would deny this right to the common working man..."

No one has taken, or has proposed taking anything from "the common man". Each person, as an individual, may decide whether or not the labor they offer is worth the pay they get in return. Individuals are free to "job shop" all they want.

However, today, the concept of "collective bargaining" has been taken to the point of near extortion. Unions have lobbied for, and in many cases gotten, laws which tilt the balance in favor of union positions. There are cases where companies cannot hire replacement workers when union members strike. That is a 'check and balance' of power between the two, and if you remove the risk of replacment, strikes can be called with impunity, crippling the business being struck.

The value of something is fairly determined by what two people will exchange for that something of their own free will. To test the value of something, put it out in the market, and see if people will line up to get it. I notice that whenever factory jobs are posted, there are hundreds of people that queue up to apply. This tells me that the labor rates being offered are in-line with market values.

To justify their existence and dues, unions will demand ever higher wages, well beyond the market price point. Don't believe me? Take your own example of "ballplayer". Tell me, does the union line of "poor, underpaid, oppressed proletariat worker" come off as genuine to you when considering unionized ballplayers with salarys in the millions? Indeed, it is laughable on it's face.