inflation pushing prices up as some wages going way down

[tex]

http://biz.yahoo.com/ap/051007/delphi_uaw.html?.v=4

AP

Delphi Asks UAW to Cut Wages, Benefits

Friday October 7, 5:45 am ET

By Dee-Ann Durbin, AP Auto Writer

Delphi Asks United Auto Workers Union to Cut Wages, Eliminate Pay for Laid-Off Workers

DETROIT (AP) -- Delphi Corp. is asking the United Auto Workers union for wage cuts of more than 50 percent and wants to eliminate pay for laid-off workers as part of the auto supplier's effort to stave off bankruptcy, according to a letter from UAW leaders.

Delphi wants to cut wages from $27 an hour to $10-$12 an hour and eliminate a jobs bank that gives full pay to 4,000 laid-off workers, officials from UAW Local 292 in Kokomo, Ind. said in the letter, which was posted Thursday on a union Web site. Delphi has about 25,000 UAW-represented workers.

Delphi also wants to reduce health care benefits and vacation time for its hourly workers as part of a restructuring deal, the letter said. The company also wants the right to close or consolidate plants.

"It is clear that in one form or another, there is a restructuring of Delphi forthcoming and it will have a dramatic impact on UAW members," the letter said.

A Delphi spokeswoman has declined to comment on the company's negotiations with General Motors Corp. and the UAW.

Troy-based Delphi has threatened to declare bankruptcy by Oct. 17 if it fails to reach an agreement with GM and the UAW to reduce its labor costs. U.S. bankruptcy laws are scheduled to change on that date, and Delphi has said the changes will make bankruptcy more difficult.

In a note to investors Thursday, JPMorgan Chase & Co. analyst Himanshu Patel said the letter indicates that GM expects the UAW to make most of the concessions Delphi needs and has not yet agreed to provide billions of dollars in relief to the supplier. GM spun off Delphi in 1999, and under that agreement, GM would be liable for some of Delphi's pension costs if the supplier declared bankruptcy.

Also Thursday, Standard & Poor's Ratings Services lowered Delphi's credit rating, saying it is increasingly concerned the auto supplier could file for bankruptcy in the next few days.

S&P lowered Delphi's credit rating two levels deeper into "junk" status, from CCC+ to CCC-, nine ranks below investment grade.

"While we believe all three parties are motivated to complete a deal outside of bankruptcy court, the time frame for doing so has become very limited," S&P credit analyst Martin King said.

S&P said Delphi suffers from a noncompetitive business structure because of the wages and benefits of its U.S. hourly workers, which were set by GM before it spun off Delphi. Delphi's hourly wages are twice that of competing auto suppliers, S&P said.

Delphi has total debt of $6 billion and pension liabilities of $14.5 billion, S&P said.

S&P's action comes one day after Fitch Ratings also lowered Delphi's credit rating further into "junk" status.

Fitch said the UAW would have more influence in an out-of-court restructuring, but the short time frame and complexity of the three-party negotiations heightened the risk of bankruptcy.

Delphi shares fell 30 cents, or 12 percent, to $2.20 Thursday on the New York Stock Exchange, matching a 52-week low.

[jbooma]

unions are the worst thing in business today :doh:

[chomerics]

unions are the worst thing ever created in business :doh:

No they weren't Booma, there is a need for unions, but politics got involved. If there was no such thing as unions, you would still have children working 16 hour days in sweat shops. :doh:

Like anything else, there is a time and a place for unions. In MANY MANY industries they are needed, but politics, like everything else involving money, got involved. In premise they are great, the give power to the working class to insure they get paid a wage which equated to the market place, but like everything else in politics, give them enough time and politicians can eff up a one car funeral.

[jbooma]

No they weren't Booma, there is a need for unions, but politics got involved. If there was no such thing as unions, you would still have children working 16 hour days in sweat shops. :doh:

Like anything else, there is a time and a place for unions. In MANY MANY industries they are needed, but politics, like everything else involving money, got involved. In premise they are great, the give power to the working class to insure they get paid a wage which equated to the market place, but like everything else in politics, give them enough time and politicians can eff up a one car funeral.

Sorry Chom that law would have changed eventually. I agree the reason for unions was good, but now they just take advantage and cry over anything.

Don't you feel they have destroyed certain areas of the country because it doesn't push the employees to learn other things and make them not only better people but employees. I feel the unions have made people enjoy the status quo, which is an issue.

[Larry]

Troy-based Delphi has threatened to declare bankruptcy by Oct. 17 if it fails to reach an agreement with GM and the UAW to reduce its labor costs. U.S. bankruptcy laws are scheduled to change on that date, and Delphi has said the changes will make bankruptcy more difficult.

I thought the new bankruptcy laws only affected middle-income individuals. Did the Republicans actually allow a law that affects big businesses to pass somehow?

[Larry]

Sorry Chom that law would have changed eventually. I agree the reason for unions was good, but now they just take advantage and cry over anything.

Don't you feel they have destroyed certain areas of the country because it doesn't push the employees to learn other things and make them not only better people but employees. I feel the unions have made people enjoy the status quo, which is an issue.

I'll also point out a counter-argument, though.

The reason a lot of companies are having problems now, is because the companies, years ago, signed a contract promising to pay then-current workers future benefits.

And then they chose not to set aside funds to cover those benefits.

They chose to "pay" their employees with virtual paychecks. And whenever there was money left over at the end of the year, they decided that that money was theirs (the owners). (And we'll worry about the unfunded liability on next year's books.)

And after decades of granting huge bonuses to their top people, now it looks like there may not be enough money to pay the folks we promised to pay decades ago and still have enough left to hand out big bucks at the top.

So, the folks who decided, ten years ago, not to fund their contractual liabilities: Those folks are going to pay, what?