Delphi Files for Bankruptcy

[Vintalage]

DETROIT - Delphi Corp., the largest U.S. auto supplier, filed for bankruptcy Saturday, sending shock waves through the nation's auto industry, which already is weakened by high labor costs and falling market share.

The company's bankruptcy is one of the largest in the country's history.

Delphi filed to reorganize its U.S. operations in federal bankruptcy court in New York, where hearings are scheduled to begin next week. Delphi's non-U.S. operations were not included in the filing.

Delphi Chairman and CEO Robert S. Miller said the company hopes to emerge from Chapter 11 in early to mid-2007.

"We will make every effort to make this as quick as possible," Miller told The Associated Press on Saturday.

Miller, a restructuring expert who was hired in July, had threatened to take the company into bankruptcy if he failed to reach a restructuring agreement with Delphi's former parent, General Motors Corp., and its largest union, the
United Auto Workers. Miller set a deadline of Oct. 17, when U.S. bankruptcy laws are scheduled to change.

Miller said Delphi will continue negotiating with GM and the UAW to lower its labor costs. Miller said the three parties agreed to continue their discussions after a bankruptcy filing.

"We mutually concluded there was still too much of the complex work yet to be done," Miller said. "It was not going to be efficient to work right up to the midnight deadline to the change in the law."

Miller said nothing will change immediately. Delphi will continue to pay its 50,000 U.S. employees and suppliers and will ship its products on schedule. Delphi has 31 plants in 13 states, including Michigan, Ohio, Alabama and California. The company has 185,000 employees worldwide.

"We are not going to adversely affect our customers," he said. "Our people will get their pay checks and will still have their health benefits. Retirees will continue to get their checks. Any changes to that will be dealt with in an orderly way."

Delphi will finance its operations with $4.5 billion in loans, including up to $2 billion in debtor-in-possession financing from a group of lenders led by JPMorgan Chase Bank and Citigroup Global Markets Inc.

Delphi, based in the Detroit suburb of Troy, has struggled to make a profit since GM spun it off in 1999. It lost $4.8 billion in 2004 and nearly $750 million in the first half of this year.

Delphi had $16.5 billion in total assets as of June 30, the most recent figure available, and has total debt of $6 billion, Standard & Poor's said Thursday. The company had $4.3 billion in unfunded pension liabilities at the end of 2004, according to a company filing with the U.S.
Securities and Exchange Commission.

The largest corporate bankruptcy in the U.S. was WorldCom Inc., which had $103.9 billion in pre-bankruptcy assets.

Like Tower Automotive Inc. and other auto suppliers who have recently declared bankruptcy, Delphi has struggled with the high cost of steel and other raw materials as well as U.S. production cuts.

But Delphi also blamed its spinoff agreement with GM for saddling it with high labor costs. Under the agreement, Delphi is required to pay GM wages of $27 an hour to most of its 24,000 UAW-represented workers. That's double the level of competing suppliers, according to Standard & Poor's Ratings Services. Delphi also had to pay full wages and benefits to 4,000 laid-off workers in jobs banks, which cost it $400 million each year.

Delphi has a total of 30,000 U.S. hourly employees and 12,000 hourly retirees. About 6,000 hourly employees are represented by other unions, including the International Union of Electronic Workers/Communications Workers of America.

Under a bankruptcy filing, Delphi could shift at least some of its pension liabilities to the federal government's Pension Benefit Guaranty Corp. and could get the court to order lower wages and benefits for the UAW and higher costs for its parts.

Under the spinoff agreement, GM also is liable for some of Delphi's pension obligations if Delphi is in bankruptcy. In a note to investors, Merrill Lynch analyst John Casesa said GM could be liable for $4.4 billion to $6.7 billion worth of pension and health care benefits.

Delphi and GM have been tightlipped about the negotiations. But a letter sent from UAW leaders to union members in Kokomo, Ind., earlier this week said Delphi asked the UAW to accept wage cuts of more than 50 percent, to $10-$12 an hour, and eliminate the jobs bank. Delphi also called for a reduction in health care benefits and vacation time.

Delphi also has been plagued by an accounting scandal that the
FBI and the SEC are now investigating. Six people have resigned because of the investigation, including Delphi's former Chief Financial Officer Alan Dawes.

http://news.yahoo.com/s/ap/20051008/...phi_bankruptcy

- Yahoo.com

[bigbenSC]

Delphi is required to pay GM wages of $27 an hour to most of its 24,000 UAW-represented workers. That's double the level of competing suppliers, according to Standard & Poor's Ratings Services. Delphi also had to pay full wages and benefits to 4,000 laid-off workers in jobs banks, which cost it $400 million each year.

This about sums up how the company got to where it is. The UAW is hurting every aspect of the American automotive industry. The American supplier spinoffs (Delphi and Visteon) can't get new business with foreign automakers because they can't afford to be cost competitive and pay these unskilled people the money that the unions insist. Something has to change and this should be a big wakeup call.

[crazypontiac03]

Dont u just love the union's. They all need to be dropped. They worked well in the 70's,80's but today there crap. UAW is the biggest mode,l of how to screw a Billion Dollar Company into the Focken Ground
.

[AaronGTR]

I agree 100%. Unions are ruining this country. The members want to get paid more and more for doing less and less work, and the quality of their work sucks because they can't get fired (at least not without a ton of problems and paperwork). Their job is practically ironclad guaranteed even if their production is low. And they want full retirement and health benefits for life... gimme a break. No one in other countries gets that. No one in other industries in the U.S. gets that. Both my parents have college degrees and they don't get those kind of benefits. They have to save money for their own retirement plan.

You shouldn't be getting $27 an hour unless you have a college degree and advanced training, or you're handling nuclear waste for a living. Something definitely has to change...

[ViperGTSR]

so THATS why they didnt show up for my practice interview!!! . There was about 8 of us signed up to interview with them and they cancelled, they clearly had bigger things on their mind.
Guess i can easily rule out working for them

[SpyhunteR]

Originally Posted by AaronGTR

I agree 100%. Unions are ruining this country. The members want to get paid more and more for doing less and less work, and the quality of their work sucks because they can't get fired (at least not without a ton of problems and paperwork). Their job is practically ironclad guaranteed even if their production is low. And they want full retirement and health benefits for life... gimme a break. No one in other countries gets that. No one in other industries in the U.S. gets that. Both my parents have college degrees and they don't get those kind of benefits. They have to save money for their own retirement plan.

You shouldn't be getting $27 an hour unless you have a college degree and advanced training, or you're handling nuclear waste for a living. Something definitely has to change...

I think $15-18 an hour should suffice.

[tenspeed]

Originally Posted by SpyhunteR

I think $15-18 an hour should suffice.

That would give you $30,000 - $36,000 per year. It sounds like a lot but take away taxes, health care, mortage and car payment. It doesn't leave much to support your wife and 2.5 kids.

[Kitt]

yet that will still put you in the top 50% of income earners

[Panacea]

Originally Posted by tenspeed

That would give you $30,000 - $36,000 per year. It sounds like a lot but take away taxes, health care, mortage and car payment. It doesn't leave much to support your wife and 2.5 kids.

That's why you get an edumacation.

[TJ95GAGT]

Delphi and GM have been tightlipped about the negotiations. But a letter sent from UAW leaders to union members in Kokomo, Ind., earlier this week said Delphi asked the UAW to accept wage cuts of more than 50 percent, to $10-$12 an hour, and eliminate the jobs bank. Delphi also called for a reduction in health care benefits and vacation time.


Yeah. That'll fly

[Warthog]

.

[Panacea]

Those people get 16-17 Holidays? WTF?!?!?!? The government doesn't even get that many. What the fock holidays are they taking off?

[crazypontiac03]

I have a few differet views on this topic, I dont think the union's will ever be elimated ,it will happen eventually Just not in our life time. I have a few comments about the hole education and going to school Replies, Going to a 4 year College isnt going to work for every one. Some make mistake's early on, some Just our plan lucky to Graduate high school, college isnt for everyone. Which is wrer the trade's come in which are good money maker's and most love there job. I do however think that they shouldn't be union but only time will tell.

[Panacea]

All I know is that America is going down the sh!tter, and fast!

[crazypontiac03]

^^Agreed. There's going to be another resession, just dont know when.

[bigbenSC]

Originally Posted by crazypontiac03

Going to a 4 year College isnt going to work for every one. Some make mistake's early on, some Just our plan lucky to Graduate high school, college isnt for everyone.

You are absoultely right, but when you don't have that education there is no way you should be working a low skill job in a comfortable environment and making more money than many of those who did get a degree. Assembly line workers should not be making as much money as teachers. If your trade invovles working in a dangerous environment, than unions are there to help you out. Working for an automotive supplier is not a dangerous job IMO and doesn't deserve a free ride. Do I fel bad that these people are going to lose a large part of their paycheck? Yeah, I do, but life goes on and times change. Unfortunately these workers will probably be ****ed off that they lost their wages and the quality of their work will go down, further hurting these American companies. This is why outsourcing is a viable option to most companies.

[GregFarz78]

UAW has to go, until they do american car manufacturers will continue to suffer.

why does some factory worker deserve $27/hr? I went to college for 4 years and dont make that much I need to join a union

[crazypontiac03]

I wish i made 27hr. Granted im in 3rd Party Logistic's. Cause for some reason we can do it cheaper then lets say a company like Motorola. Which at this time we have a contract with. Then they wonder why we bought out half of there logistics sector. Now there all ****ed off cause they have to take a cutt in pay. Im sorry your makine 30 Bucks an hour some of them. Doing nothing but moving product from one end of the building to the other. Wish i made that much doing noting.

But yes the union's such as UAW have to go!

[gtmodz]

Obviously none of you that say a factory worker shouldnt make that much have never worked in a factory. Most of those people work their asses off their entire lives for what they get in retirement. If you ever saw a 60 year old man stumbling around a job you would realize that even $27/hour isnt worth it. Why do you think auto workers are a dying breed? Now they have that same ******* that screwed the United Airline workers trying to screw all of these people. You go to college not only to make more money, but to not have to do manual labor. And, most assembly workers work in a very poor environment.

[95-GT]

I guess my dad doesnt deserve to make $29.50+/hr because he doesnt have a college degree, but he has worked the last 37 yrs of his life at Fords, right?