General Motors Corp (GM) heads into a critical week as the world's largest auto maker faces the bankruptcy filing of its top components supplier and tough negotiations with its workers' union.
The company, which lost more than US$1.2 billion in the first six months of this year, is seeking help from the United Auto Workers (UAW) union to help reduce its healthcare and pension costs, while working to limit the negative repercussions of Saturday's bankruptcy filing of its largest components supplier, Delphi Corp.
Delphi, which was spun-off from GM in 1999, and its decision to seek bankruptcy protection could pose enormous financial hardships for GM, since the company could be held liable for funding the supplier's pension equity, which is currently underfunded by US$4.3 billion.
Delphi had been seeking some type of bailout from its former parent company to avoid bankruptcy, but those negotiations failed to reach a mutually beneficial settlement.
GM has nearly US$16 billion in cash but can ill afford to pay Delphi's pension burdens at a time when it needs all its cash to fund future product programs. The automaker is trying to reverse a sharp decline in market share and compensate for shrinking sales in its most profitable models: full-sized trucks and SUVs.
The automaker says it does not expect Delphi's bankruptcy filing to trigger any obligation for it to pay for the supplier's pension obligations.
"In connection with the Delphi split-off, GM has provided limited guarantees with respect to certain benefits payable by Delphi to former GM US hourly employees who transferred to Delphi relating to pensions, post-retirement health care and life insurance. The Delphi Chapter 11 filing does not by itself trigger any of the benefit guarantees," the automaker said in a statement.
Union members could be some of the biggest losers in the fallout from the bankruptcy of Delphi.
"We may be witnessing the destruction of organized labor as we've known it in the auto industry," said David Cole, head of the Center for Automotive Research in Ann Arbor, Michigan.
Cole said that the bankruptcy would have profound impact on the US auto industry and its major unions, which over the past 60 years have built contract protections that guaranteed relatively high wages, medical benefits and pensions.
The top executive at Delphi, North America's largest automotive supplier, said on Saturday the company hopes to use court protection under Chapter 11 of the US bankruptcy code to force a re-write of labor contracts that have made it hard to compete in what is now a global business.
For now Delphi will continue to pay its 35,000 US employees under the current labor contract with the UAW and other unions.
"Our people will get their pay checks and will still have their health benefits. Retirees will continue to get their checks," Delphi chairman Robert "Steve" Miller said.
But Delphi expects to negotiate a new labor agreement by late winter with the UAW that will enable it to become more competitive. The bankruptcy laws require a good-faith effort to reach an equitable agreement with the UAW, but the company is also prepared to use the court to impose a new contract on the union, Miller said.
In negotiations prior to filing for bankruptcy protection, Delphi was looking for deep cuts in the pay and benefits of hourly workers, he confirmed. The company also expects to close or sell some of its plants, Miller said.
The UAW has said that the cuts Delphi sought would mean workers would no longer be able to buy cars made with the parts they built. It said on Saturday it was "deeply disappointed" by the decision to file for bankruptcy.
UAW president Ron Gettelfinger said the UAW was committed to doing everything it could to protect the interests of active and retired members and their families. And he ripped Delphi's decision to improve the severance package for the company's top management even as it was preparing to file for court protection.
"Once again, we see the disgusting spectacle of the people at the top taking care of themselves at the same time they are demanding extraordinary sacrifices from their hourly workers, engineers, administrative and support staff, mid-level managers and others. All of them deserved better from Delphi's senior executive leadership," Gettelfinger said.
Miller said the company was paying double the market rate to union members and defended the severance packages as necessary to help retain the executive talent needed to restructure the company.
NO-LIMITS PARTNERSHIP: ‘The bottom line’ is that if the US were to have a conflict with China or Russia it would likely open up a second front with the other, a US senator said Beijing and Moscow could cooperate in a conflict over Taiwan, the top US intelligence chief told the US Senate this week. “We see China and Russia, for the first time, exercising together in relation to Taiwan and recognizing that this is a place where China definitely wants Russia to be working with them, and we see no reason why they wouldn’t,” US Director of National Intelligence Avril Haines told a US Senate Committee on Armed Services hearing on Thursday. US Senator Mike Rounds asked Haines about such a potential scenario. He also asked US Defense Intelligence Agency Director Lieutenant General Jeffrey Kruse
INSPIRING: Taiwan has been a model in the Asia-Pacific region with its democratic transition, free and fair elections and open society, the vice president-elect said Taiwan can play a leadership role in the Asia-Pacific region, vice president-elect Hsiao Bi-khim (蕭美琴) told a forum in Taipei yesterday, highlighting the nation’s resilience in the face of geopolitical challenges. “Not only can Taiwan help, but Taiwan can lead ... not only can Taiwan play a leadership role, but Taiwan’s leadership is important to the world,” Hsiao told the annual forum hosted by the Center for Asia-Pacific Resilience and Innovation think tank. Hsiao thanked Taiwan’s international friends for their long-term support, citing the example of US President Joe Biden last month signing into law a bill to provide aid to Taiwan,
China’s intrusive and territorial claims in the Indo-Pacific region are “illegal, coercive, aggressive and deceptive,” new US Indo-Pacific Commander Admiral Samuel Paparo said on Friday, adding that he would continue working with allies and partners to keep the area free and open. Paparo made the remarks at a change-of-command ceremony at Joint Base Pearl Harbor-Hickam in Hawaii, where he took over the command from Admiral John Aquilino. “Our world faces a complex problem set in the troubling actions of the People’s Republic of China [PRC] and its rapid buildup of forces. We must be ready to answer the PRC’s increasingly intrusive and
STATE OF THE NATION: The legislature should invite the president to deliver an address every year, the TPP said, adding that Lai should also have to answer legislators’ questions The Chinese Nationalist Party (KMT) yesterday proposed inviting president-elect William Lai (賴清德) to make a historic first state of the nation address at the legislature following his inauguration on May 20. Lai is expected to face many domestic and international challenges, and should clarify his intended policies with the public’s representatives, KMT caucus secretary-general Hung Meng-kai (洪孟楷) said when making the proposal at a meeting of the legislature’s Procedure Committee. The committee voted to add the item to the agenda for Friday, along with another similar proposal put forward by the Taiwan People’s Party (TPP). The invitation is in line with Article 15-2