The Delphi Corporation auto parts plant where Brian Stover works bears little resemblance to the industry’s iconic assembly lines. One of the largest integrated circuit plants in the country, the quiet, microscopically clean complex of high-tech fabrication machines in Kokomo, Indiana produces critical components for today’s electronically sophisticated vehicles. That gives Stover, a skilled maintenance worker, a rare measure of job… return to article
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Reader Comments (5)Page 1 of 1 pagesDelphi “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 3:58 PM 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’s that money now?’ he asks. ‘[It’s] in China, Korea and other countries, making everyone else look profitable. What happened to the money and benefits I’ve been giving up every year?’ ”
He asks “where’s that money now?” Then he answers his question with what is probably an incorrect answer. He is suggesting that the U.S. operations are hugely profitable, but the company has been funneling those profits to mask losses at overseas operations. That is an unbelieveable assertion. I don’t buy it, and he doesn’t support it.
“Rank-and-file autoworkers have been organizing through a new network, Soldiers of Solidarity, to conduct “work-to-rule” slowdowns to fight any concessions.”
Naturally, fight every effort to be paid an amount commensurate to your economic worth.
Then the writer just goes off the deep end. More government, more government, naturally. Then this:
“But, in exchange, the public should get a stake in the ownership of the companies, an agreement on promises for domestic production, and protection of both workers’ right to organize and standards of living.”
The unsurprising leap to communism.
Posted by jeffc on Jun 7, 2006 at 4:07 PM 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.
Posted by tina1 on Jun 8, 2006 at 3:05 AM “But, in exchange, the public should get a stake in the ownership of the companies, an agreement on promises for domestic production, and protection of both workers’ right to organize and standards of living.”
Or leading more accurately to a real fascism, unlike the faux fascism the left is continually saying we are about ready to slip into.
It is amazing how “progressives” of all strips want more government control over the economy, no matter how disastrous such policies have been in the past. Although it isn’t clear that we can have liberty with a free market economy, it is increasingly clear we can’t have it without a free market.
Posted by chopper on Jun 17, 2006 at 10:39 PM 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 7:56 AM Page 1 of 1 pages -
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Also by David Moberg
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