Shares of struggling General Motors closed at their lowest level in nearly two decades as investors reacted to a strike threat at its largest auto parts supplier. After having dropped more than 30 percent in the past month, shares of the world's largest automaker closed down 5.8 percent at 21.29 dollars, up from a low of 20.90 in afternoon trading. It was the weakest close since the crash of October 1987, said Art Hogan, an analyst at Jefferies, who said some investors are concerned that GM could follow its subsidiary, Delphi, into bankruptcy. "They have the same issues in term of legacy costs," he told AFP. "If they had to follow the same path and file for bankruptcy as well, that would be a major issue." A spokeswoman for GM downplayed those fears, and said the company had recently obtained major concessions from the union"" on health care costs. The comments from the United Auto Workers "are related to Delphi," said spokeswoman Toni Simonetti. The UAW said Wednesday that the "unprecedented" salary cuts proposed by Delphi could not be accepted by union"" members and warned that a strike was possible at GM's largest supplier. "We have been subject to an unprecedented attack on our wages," the UAW said on its website. "Delphi's solution is to force its workers to near poverty-level wages while rewarding executives with 90 million dollars in bonuses." A strike at Delphi could interrupt production at GM, a costly interruption at a time where GM can ill afford it. GM has been struggling with a loss of profit and market share as consumers shy away from its gas-guzzling sport-utility vehicles. It lost 3.8 billion dollars in the first three quarter of 2005 and has seen sales drop by more than 20 percent in September and October. A BIG FAT THANK YOU TO BUSH AND THE FREE TRADE SOB'S! HOW FREE IS "FREE TRADE" NOW?!!. We get to witness the destruction of America! WWIII rises from the ashes!
I think it has just as much to do with union"s. They have effectivly destroyed America's ablitly to manufacture anything. When some slob is making $20-$30 and hour to attach bolts....and he does a shitty job...yeah I am gonna fire him and pay someone who is younger has no experience less to do a better job... Now I don't agree with upper management getting huge bonuses, but IMO American expectations of wages and benefits are way over the top IMO.
Yeah, union"s were definatly a very much needed thing at one time and did good things but once they got going they didnt know when to stop and cut thier own throats by uping demands until it pushed their jobs over seas. Now they still want to strike if the guy getting $25/hr to gas up a train or whatever dosnt get a $.50-$1.00/hr raise and his kids braces paid for by the employer.
Declining prices from competition on the world market and high wages have forced auto parts manufacturer Delphi into bankruptcy. Robert S. "Steve" Miller, the chairman of Delphi Corp, took the company into bankruptcy court to force concessions from the United Auto Workers. Miller says Delphi cannot pay the high wages, long vacations, health coverage and generous retirement benefits that are too high compared to the prices Delphi can get for its products. A decrease in price normally causes producers to reduce output and layoff employees when output is less than long-run potential. The United Auto Workers and other union"s protested the move, which Miller said was the only way to get Delphi out from under the burden of high wage, health care and pension costs. Friday in an interview, Miller called the workers honest, loyal, hardworking people who took jobs in the auto industry and "played by the rules" and "cannot be blamed for pursuing the American dream." The problem, Miller said, industries can not deliver on their long term commitments to wages and other resource costs. “All of us have been caught short by fast-changing global economics," he said. "Our people are being severely impacted. I don't blame them for being frightened, uncertain and even angry." Robert S. "Steve" Miller has been around reorganizations in several companies. Miller was with Lee Iacocca for the Chrysler turnaround, and then was chief executive of Bethlehem Steel Corp. from 2001 to 2003, when domestic steel companies were crippled by a surplus of U.S. mills and low-cost international competition. Bethlehem went bankrupt in 2003 and was sold to a bigger steelmaker, and Miller was on the board of UAL Corp. when its United Airlines unit went bankrupt. Now chairman and chief executive of Delphi, Miller explains his decision: "In our case, we ran out of money," he said. "Now, we have stockholders; they've basically been wiped out by this. We have bond holders; they, in good faith, loaned money to this company, and now they're being told they may not get any back. We have a bankruptcy court system that is designed to sort out the pain among all the people who are expecting to recover from this." Miller said Delphi could not "extract more money from our customers than what the global market says that the parts are worth. That's it." Delphi, formerly a part of General Motors Corp., was split off as a stand-alone company in 1999. The union"s negotiated wage, benefits and health care coverage that was roughly equal to what they received as GM employees. To revitalize Delphi, Miller's team is taking on the United Auto Workers, one of the nation's most powerful union"s. Delphi issued a new contract offer last week proposing that union" workers accept wages of as little as $9.50 per hour. The proposal could reduce vacation days, health coverage, pensions and possibly other benefits. In response, the UAW called the new deal a "dismal idea" that shows "a total lack of concern" about the Delphi workers and their families. The union"s had rejected Delphi’s original offer, which had led Miller to the bankruptcy court. Delphi and the UAW must try to work out a compromise before the end of this year, when Delphi will ask a bankruptcy court judge to decide pay and benefits. Miller said it would be a tough decision for the union" employees, as it was for the Bethlehem Steel employees. He sold Bethlehem Steel after their union" workers would not make enough concessions to keep the company solvent. He said union" workers needed to be willing to "trade one thing for another." "Example, vacation time," Miller said. "Do you still want to have weeks and weeks and weeks of vacation time, or would you rather have more pay and less leisure? That's a choice. It was okay when we were wealthy as a corporation; we were able to do both." Miller said he is trying to be more flexible this time. Miller also wants to negotiate on outsourcing work to contractors, and the ability to lay off workers during a plant shutdown without paying them almost as much as when the plant is running. The union" has rationalized this hard won contract provision as a way to protect worker paychecks in a volatile industry. If the current contract is thrown out in court, the union" would regain the right to strike, which could also cripple GM. Miller said some plants around the country that made low-end parts like spark plugs would be closed. Miller said U.S. manufacturing can still be competitive, but not making the low end parts that: “are going to be made for $2 an hour someplace else and shipped -- period." Low prices forced Delphi’s output lower than long-run potential, leaving Delphi with long term wage and benefit contracts it could not pay.
