Delphi “proposed cutting workers’ jobs and wages by roughly two-thirds.”
That just wouldn’t work. All the workers would leave Delphi and go to other jobs that pay more than the lower wage that Delphi is offering. Either the workers would go to other higher paying jobs, or the fact that the Delphi job at the lower wage is still the best job available to the worker is evidence that unions lead to workers getting paid more than the economic value of what the workers offer the employer. That’s what union-supporting legislation has done: It has led to a scenario in which Delphi employees were getting paid more than their economic worth, and now the proverbial chickens are coming home to roost.
“Most foreign-owned plants are non-union and located in the South.”
Why would those foreign companies avoid unionization? Could it be to avoid having to pay workers more than the economic worth of what they offer?
“Arguably, Delphi’s problem stemmed from GM’s failure to design cars that could command its historic premium in the marketplace.”
Arguably, GM’s unionized cost structure raised its cost of capital, hindering its ability to invest as much in R&D as did its competitors with lower cost structures.
“Also, at least eight other lower-wage auto parts companies have declared bankruptcy in the past couple of years, suggesting deeper industry problems, like over-capacity and an unrealistic price squeeze from companies like GM.”
Perhaps if GM’s cost structure had been more competitive, it could have sold more and better cars, and it would not have put so much pressure on its suppliers that most are either bankrupt or near bankrupt.
“Delphi managers are trying ‘to break unions and reduce labor costs instead of managing the business and looking internally at what they’re doing wrong.’ “
It is possible for a company to do virtually everything right, yet if its cost structure causes it to be uncompetitive, it will not succeed. Delphi’s and GM’s problems flow from their cost structure, and their cost structure is bloated because of unions.
“But ‘where did that money come from?’ Stover asks. ‘Out of U.S. operations.’ “
The initial investments probably came out of the U.S. But those overseas operations were and are more profitable in and of themselves. And our tax laws create a disincentive to repatriate profits.
MORE…
Posted by jeffc on Jun 7, 2006 at 8:58 AM
A huge irony in all this is that the individual who organized the bankruptcy of Delphi—namely, Felix Rohatyn of Lazard investments—is a very big operator in the Democratic Party. He was Bill Clinton’s ambassador to France after the death of Pamela Harriman, and is basically the “political godfather” of the so-called Democratic Leadership Council—the “new” Dems who spurn the old alliances with farm and labor, mesmerized by the chimera of the speculative “New Economy”. Lazard was also at the center of the bankruptcies of Braniff, PanAm and Eastern Airlines, as well as Bethlehem and Weirton Steel. It provided the startup capital for Enron, which then took a wrecking ball to the regulated utilities which served the public interest adequately for decades. We also recall Rohatyn’s role in looting the coffers of New York City in the contrived 1975 “bankruptcy”. But Rohatyn’s fascist roots run deeper. Lazard, along with its associated Bank Wurms, was cited by US intelligence services during WW II as being the principal backers of Hitler in France. (This phenomenon was known as “Synarchism”.) A specific individual cited, Andre Meyer, was Rohatyn’s sponsor and mentor when he relocated from France to the US.
To those baby boomers who cavalierly scoff while America’s industrial base is raided and ransacked by hot money interests from international finance, please consider this: where will we be when the dollar bubble bursts, and we belatedly discover the need to mobilize our nation to start PRODUCING again? Thanks.
Posted by JoeCJ on Jul 22, 2006 at 12:56 AM
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Reader Comments
Delphi “proposed cutting workers’ jobs and wages by roughly two-thirds.”
That just wouldn’t work. All the workers would leave Delphi and go to other jobs that pay more than the lower wage that Delphi is offering. Either the workers would go to other higher paying jobs, or the fact that the Delphi job at the lower wage is still the best job available to the worker is evidence that unions lead to workers getting paid more than the economic value of what the workers offer the employer. That’s what union-supporting legislation has done: It has led to a scenario in which Delphi employees were getting paid more than their economic worth, and now the proverbial chickens are coming home to roost.
“Most foreign-owned plants are non-union and located in the South.”
Why would those foreign companies avoid unionization? Could it be to avoid having to pay workers more than the economic worth of what they offer?
“Arguably, Delphi’s problem stemmed from GM’s failure to design cars that could command its historic premium in the marketplace.”
Arguably, GM’s unionized cost structure raised its cost of capital, hindering its ability to invest as much in R&D as did its competitors with lower cost structures.
“Also, at least eight other lower-wage auto parts companies have declared bankruptcy in the past couple of years, suggesting deeper industry problems, like over-capacity and an unrealistic price squeeze from companies like GM.”
Perhaps if GM’s cost structure had been more competitive, it could have sold more and better cars, and it would not have put so much pressure on its suppliers that most are either bankrupt or near bankrupt.
“Delphi managers are trying ‘to break unions and reduce labor costs instead of managing the business and looking internally at what they’re doing wrong.’ “
It is possible for a company to do virtually everything right, yet if its cost structure causes it to be uncompetitive, it will not succeed. Delphi’s and GM’s problems flow from their cost structure, and their cost structure is bloated because of unions.
“But ‘where did that money come from?’ Stover asks. ‘Out of U.S. operations.’ “
The initial investments probably came out of the U.S. But those overseas operations were and are more profitable in and of themselves. And our tax laws create a disincentive to repatriate profits.
MORE…
MORE…
“And what about those ‘legacy costs’ for healthcare and pensions? Stover says that, starting in 1984, the union agreed to concessions and cost containment clauses in every contract to pay for those commitments to workers. ‘Where
The union workers deserve what they get. They are lazy and greedy and they think they are intitled to these jobs. The funny thing is that most union workers are not even good workers.
A huge irony in all this is that the individual who organized the bankruptcy of Delphi—namely, Felix Rohatyn of Lazard investments—is a very big operator in the Democratic Party. He was Bill Clinton’s ambassador to France after the death of Pamela Harriman, and is basically the “political godfather” of the so-called Democratic Leadership Council—the “new” Dems who spurn the old alliances with farm and labor, mesmerized by the chimera of the speculative “New Economy”. Lazard was also at the center of the bankruptcies of Braniff, PanAm and Eastern Airlines, as well as Bethlehem and Weirton Steel. It provided the startup capital for Enron, which then took a wrecking ball to the regulated utilities which served the public interest adequately for decades. We also recall Rohatyn’s role in looting the coffers of New York City in the contrived 1975 “bankruptcy”. But Rohatyn’s fascist roots run deeper. Lazard, along with its associated Bank Wurms, was cited by US intelligence services during WW II as being the principal backers of Hitler in France. (This phenomenon was known as “Synarchism”.) A specific individual cited, Andre Meyer, was Rohatyn’s sponsor and mentor when he relocated from France to the US.
To those baby boomers who cavalierly scoff while America’s industrial base is raided and ransacked by hot money interests from international finance, please consider this: where will we be when the dollar bubble bursts, and we belatedly discover the need to mobilize our nation to start PRODUCING again? Thanks.
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