Posted on 10/09/2005 5:44:11 PM PDT by drt1
Workers face prospect of wage, benefit concessions or court-ordered cuts. First came the U.S. steel industry. More recently, money-losing airlines have landed themselves in bankruptcy court to cut labor costs. Now, Saturday's filing by auto parts maker Delphi signals that the U.S. auto industry has arrived at the same crossroads with its work force: agree to out-of-court concessions, or face the prospect of court-ordered cuts in wages, benefits and pensions.
Delphi, a $29 billion industrial giant, has been struggling to make a profit since General Motors spun off its parts subsidiary in 1999. Last year, Delphi lost $4.8 billion; it lost nearly $750 million in the first half of this year.
A tougher new bankruptcy law effective Oct. 17 may have accelerated Delphis move to seek refuge in federal court in Manhattan to reorganize its money-losing operations....
(Excerpt) Read more at msnbc.msn.com ...
Yep. Just before the filing the Board voted generous separation agreements for more than 100 key managers. Really sweet, they take as much as they can while dumping their underfunded pension plan on us (AKA the Pension Benefit Guaranty Corp). A real crock and something that should be rescinded by the Bankruptcy Court.
The beauty of outsorcing is that we still get to pay.
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
Oh yeah, that too. The bankruptcy only involves the US operations. Offshore Ops are separate and are running business as usual and, I suspect, will take on even more of the Delphi US business while leaving us the shell to pay off.
I would think that the stricture is more than ethical. I mean really, this is simply fraudulent. The workers take on what is, in effect, a contractual IOU in lieu of current wages and top management takes this, bankrupts the company and defaults on the IOU. Gotta be illegal if you ask me.
That's why I never was a fan of defined-benefit pensions. I like the RSP approach instead, if it tanks I have noone to blame but myself. Also, one lesson that was reinforced by Enron: NEVER rely on the same source for both current income and retirement.
The dumping of pension plans on the taxpayers will be the equivalent of the savings and loan debacle in the '80s.
I don't think it is that bad. In the S & L debacle the Gov't took over the failed units and then sold of their assets a super bargain basement prices to the well connected in what, IMO, were patently fraudulent transactions. We picked up the difference between what they gave away and what was owed. (Incidentally, Ted Kopple bought his estate from the Resolution Trust Corp just this way and I bet you and I could never have even bid against him for it)
There is, it's called "every man for himself."
Those horrible unions getting golden parachutes. How terrible.
Very irksome, the very ones at the top who created the disaster walk away smiling, while the minions get stuffed.
When company was downsizing and I took early retirement, it was for this reason I rejected the monthly paycheck and lump summed out. Whatever happened to the money once in my hands, I would have none to blame but myself.
Better throw open the windows and get some ventilation theres fumes or something where you are.
Problem stems from the fact that unions have been able to legally extort compensation WELL in excess of their value or importance. Executive pay is a drop in the bucket.
Those minions were pulling in 68K back in 1984 working 36 hours/wk with a pension and health/welfare plan youd kill for.
Chickens coming home to roost. Thats my opinion.
Cute. Your solution?
PBGC is a federal corporation created by the Employee Retirement Income Security Act of 1974. It currently protects the pensions of 44.4 million American workers and retirees in 31,200 private single-employer and multiemployer defined benefit pension plans. PBGC receives no funds from general tax revenues. Operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans.
The PBGC is not backed like the FSLIC/FDIC - if they default the Congress would have to vote to bail them out, it is not an automatic action. I think the Congress would have a very hard time dealing with this - hence you see feeble efforts (like GA Sen. Johnny Isaacson's meaningless bill to allow airlines to reach fully funded pension status over a very long "catch up" period) to deal with [sic] the situation. All GM did was outsource (by spin-off) a money losing division in Delphi. Now that it has crashed and is starting to burn - the issue of general revenue bailouts of the privately negotiated pension plans will become an issue. My view - over my dead body.
but not yet to government employees and members of congress
What are you talking about?
Every business that goes under faults the unions, management is never to blame. However management does look after itself. The taxpayers will prolly have to pick up the union pensions, management moves to Bahamas and builds a mansion.
If these contracts were inherently uneconomical management had a duty, along with the stockholders through their representation on the Board, to refuse the agreement.
It takes two to engage in this and, though I don't like Unions in general, I do not excuse management for their turpitude and, in the final fling of paying themselves, from the accusations of fraudulent behavior.
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