Delphi moves to tear up union contracts

[Ranman]

http://www.autonews.com/apps/pbcs.dll/article?AID=/20060331/REG/60331006/1003/newsletter08&refsect=newsletter08

I'm going to make 2 predictions here.

1.) Delphi will close 75% of it's plant locations
2.) GM will file for bankruptcy protection

Within 12 to 18 months, a major corporate trainwreck will occur in Detroit.

[Rootsy]

i have this feeling that realestate is gonna be very plentiful in michigan this year... boats, sleds, rv's and cars will be for sale by the droves, and we, as a state, are gonna dry up and blow away before it's all said and done with... there are a lot of people with inflated incomes living well beyond their means (depending on big wages and a lot of OT) working under UAW contracts...

[RickSE]

This is sad to hear. I used to work for Capitol Technologies in South Bend who did a lot of business with Delphi. If or when Delphi goes down they will likely take many other companies with them, other then GM. I do believe Capitol saw the writing on the wall though and started looking for other business. God luck guys.

[gcarter]

There comes a time when those tough corporate decisions must be made....better sooner than later.
GM has never had the corporate will to move swiftly.

Honestly, this isn't about good guys, bad guys. It's about keeping up with marketing and manufactoring realities.

[TuxedoPk]

i have this feeling that realestate is gonna be very plentiful in michigan this year... boats, sleds, rv's and cars will be for sale by the droves, and we, as a state, are gonna dry up and blow away before it's all said and done with... there are a lot of people with inflated incomes living well beyond their means (depending on big wages and a lot of OT) working under UAW contracts...

I think you are right about there being a decline in real estate values but I think 2007 will have more of a decline than 2006. I think this will be national, but your neck of the woods will probably get hit harder than most. (I'm selling all my real estate now and plan on being liquid and renting for 24 months before repurchasing- anyone else contemplating doing the same?)

Jamie- Knowing what's coming this wouldn't be a bad time to start investing in those sectors that will prosper from an economic downturn. A lot of people who are going to finding themselves filing for personal bankruptcy are going to find the new laws aren't what they used to be. (There was a pretty significant rise in the value of non-performing notes for personal debt as the new laws came into effect)

I don't think Michigan is going to dry up and blow away though... 5-10 years from now it will probably be stronger and its economy built on a more stable foundation.

[gold-n-rod]

A not so dire perspective from today's Lansing (MI) State Journal


Delphi revamp not necessarily disaster for area
By Barbara Wieland
Lansing State Journal


Troy-based auto parts supplier Delphi Corp. unveiled a broad restructuring plan Friday that could sound alarming to mid-Michigan.

It includes:

• Cutting 8,500 salaried jobs;

• Shutting or selling 21 plants - several of them in Michigan;

• Asking a judge to void its labor agreements.

The result is the threat of a business-halting strike, bankruptcy for GM and more lost jobs. But Kim Korth, president of automotive research firm IRN Inc., said the situation might not be as dire as it seems, for four reasons:

• An agreement on union contracts is still possible.

Normally, a bankrupt company files notice that it wants to void union contracts and receives a hearing in two weeks. In this case, the hearing is May 9 - five weeks away.

Korth said that could signal that Delphi is still negotiating with the union and believes it could reach a deal.

"If there was no hope of coming to a deal before the hearing, they wouldn't be waiting five weeks," she said.

• The closure of Delphi plants could result in more jobs near Lansing.

Don't assume Delphi work will be shipped overseas, Korth said. With one car assembly plant in Lansing and another scheduled to open later this year, it's possible that a supplier that takes over Delphi's contracts will bring work here.

"There is potential for expansion at non-Delphi plants," she said. "The proximity to the assembly plants could be a reason to bring the work to Lansing."

• The worst-case scenario would be a voiding of the labor contracts by the court, followed by a labor strike in protest.

A strike would mean a halt in production at Delphi plants. GM plants that rely on those parts would use up their stock, but would have to shut down temporarily if no more parts were available.

It would be similar to what happened in 1998, when a 54-day strike at a two GM plants in Flint halted production at other GM factories. "I remain relatively optimistic that this will be avoided," Korth said.

• GM is fiscally prepared for a Delphi strike and the possibility of taking back Delphi workers and plants that used to be part of GM.

GM said it expects Delphi's bankruptcy to cost it $5 billion to $6 billion. Those costs would come as GM is held to contractual obligations to take back some Delphi workers who used to be employed by GM and to pick up benefit coverage for some Delphi workers.

GM is working to make sure it has enough cash on hand to cover those possibilities, Korth said.

"That's why GM said (Thursday) that they want to sell their stake in Suzuki (Motors)," she said. "They won't be caught off guard."