NationStates Jolt Archive

http://msnbc.msn.com/id/9653288/
You may have never heard of these guys. But you know their customers: GM, Ford, and Diamler Chrysler. GM spun them off in 1999, and ever since, they've been the world's largest auto parts supplier to some of the world's largest carmakers, all American. As if the American auto industry didn't have enough trouble, they now have this.

I heard on CNN that Bank of America has downgraded GM's financial strength and "predicted" a 30% chance that GM will followthe big D into bankruptcy. Full Blown Recession, Here We Come!

Read the article and one that was linked on the side--here's some balanced reporting for you. At least four times total in the two articles, management was quoted as saying that in order for Delphi to survive, they were going to have to fire lots of union people and push through wage and benefits cuts. This is all the articles had to say on management:
UAW President Ron Gettelfinger in a statement called the filing a “bitter pill” and criticized Delphi for sweetening the severance packages of 21 top executives the day before seeking bankruptcy protection. No details as to just how sweet the severance packages were--just that the head of the UAW is bitching about it. The sentence was added almost as an afterthought.
That's from the second article I read. (http://msnbc.msn.com/id/9649748/)

BY the way, don't take this as a criticism, Lotus Puppy. It's a criticism of the one-sidedness of the media when it comes to labor issues in general.

[QUOTE=The Nazz]Read the article and one that was linked on the side--here's some balanced reporting for you. At least four times total in the two articles, management was quoted as saying that in order for Delphi to survive, they were going to have to fire lots of union people and push through wage and benefits cuts. This is all the articles had to say on management:
No details as to just how sweet the severance packages were--just that the head of the UAW is bitching about it. The sentence was added almost as an afterthought.
That's from the second article I read. (http://msnbc.msn.com/id/9649748/)[QUOTE]

The bankruptcy court will take care of that...if it is true.

Good. American cars are fugly in the extreme. Mostly.

Good. American cars are fugly in the extreme. Mostly.


What an absolutely ignorant and unresponsive comment.

What an absolutely ignorant and unresponsive comment.
Yup. I know nothing of the field of economics, so I made a comment in a field I do know: aesthetics. American cars are not aesthetically pleasing, I find.

I heard on CNN that Bank of America has downgraded GM's financial strength and "predicted" a 30% chance that GM will followthe big D into bankruptcy. Full Blown Recession, Here We Come!

The bankruptcy of GM would have a large impact on our economy, but not a recession-making one. The economy depends on so many other factors than just one (albeit large) company. In addition to the many thousands of other employers, indexes such as consumer confidence, consumer spending, and the stock market in general dictate the economy's well being.

The bankruptcy of GM would have a large impact on our economy, but not a recession-making one. The economy depends on so many other factors than just one (albeit large) company. In addition to the many thousands of other employers, indexes such as consumer confidence, consumer spending, and the stock market in general dictate the economy's well being.


I am incredibly worried about it. GM going bankrupt would have huge ramifications, especially when coupled with the recent cooling of the housing market, lender tightening, nearly doubling of minimum credit card payments, astronomical gas prices which have already impacted commodity prices, increased home heating costs, etc.

I don't know what your background is, but I work in the trenches. I called the 2000/2001 recession almost to the month - 15 months before it occurred. While, I think that was a great coincidence, the many businesses I work with are tightening up their spending as a result of their consumer's decline in spending. I am also seeing a real spike in litigation over contracts and deals entered a year or so ago. These were the same signs I encountered in 1999.

Those who do not adapt, become victims of globalisation.

These things happen in a competitive market. It is like the removal of deficient genes, a natural process, and the sector will be healthier in the long term as a result.

Ok - well I have officially become old. I used to be able to look at things like the national economy or international relations and be very cold and calculated. War as population control, etc. etc. However, when I started to see my new house, or my new car, my vacation, my child's college education, or my retirement fund on the line - it changed my tune significantly.

Let's keep watching this situation and see if other large corp.s follow.

I think we need to find the brilliant conclusion that constant economic growth is toally impossible. Then again, isn't pegging the future of the US economy on one company that's in a specialized market going bankrupt? Even if General Motors goes bankrupt, how will that be any kind of shock based on the past 10 years. If, say, General Electric went bankrupt, I'd wet myself in fear.

btw, ugly car = Honda Element.

I heard on CNN that Bank of America has downgraded GM's financial strength and "predicted" a 30% chance that GM will followthe big D into bankruptcy. Full Blown Recession, Here We Come!
And Ford got downgraded some time last year. Don't know if they ever got upgraded again.

I seriously hope that GM doesn't go bankrupt along with Delphi. Here in Michigan our economy is in rough shape anyway, and all we need is one of the state's largest employers going down the tubes. Delphi going into bankruptcy is going to hurt enough as it is.

Read the article and one that was linked on the side--here's some balanced reporting for you. At least four times total in the two articles, management was quoted as saying that in order for Delphi to survive, they were going to have to fire lots of union people and push through wage and benefits cuts. This is all the articles had to say on management:
No details as to just how sweet the severance packages were--just that the head of the UAW is bitching about it. The sentence was added almost as an afterthought.
That's from the second article I read. (http://msnbc.msn.com/id/9649748/)

BY the way, don't take this as a criticism, Lotus Puppy. It's a criticism of the one-sidedness of the media when it comes to labor issues in general.
I don't take it as critism. But I really feel that big labor must be a bit more flexible with big business. They complain about pay cuts and benefit cuts now, but it'd definitly be better than the loss of the company they may get later on. Today's bankruptcy is not reassuring.
Still, these car companies are lightyears behind foreign automakers in labor relations. That's why the big Japanese three are moving production to the US. The autoworkers' unions can be dealt with, as they've learned, and the labor costs for foreign operations in the US are lower than American ones in the US. The big American three, on the other hand, never had it good with the unions. Remember a few years ago when GM workers went on strike? That legacy hasn't left.

Well, this was bound to happen. Delphi's been in rough shape ever since GM spun it off in 1999 (wonder why, given the amount of debt and legacy costs this company was carrying), and so it was more or less a time bomb waiting to happen. Personally, I think it might help Delphi, and by extension GM in the long run by helping it get rid of some of the insane legacy and labor costs.

This is competition in action.

Of course, employees at Delphi will be safe jobwise as long as they are in the higher-tech/complex manufacturing divisions of the company. If anything, those sectors will do well due to the heavy degree of insourcing from foreign automakers. Perhaps they can be spun off of the aging relic in to something successful.

Let's keep watching this situation and see if other large corp.s follow.

No, actually profits in most industries (even heavy hit ones like telcos and internets) are soaring. Genentech, for example, wowed expectations and revenue rose 56%. If anything, our economy's repositioning itself for the future, since high tech industries are doing great while the older, "traditional" companies are falling behind.

I think we need to find the brilliant conclusion that constant economic growth is toally impossible. Then again, isn't pegging the future of the US economy on one company that's in a specialized market going bankrupt? Even if General Motors goes bankrupt, how will that be any kind of shock based on the past 10 years. If, say, General Electric went bankrupt, I'd wet myself in fear.

GM has some brands that people are very attached to, but once we get over the fact that there'd be no new Chevys or Buicks, the economy would go just fine. In fact, it'd be a blessing if GM went bankrupt. The auto market has way too much capacity because the UAW forces GM to keep underpreforming factories running until every worker there retires.
Yet I think that GM has the potential for a solid future. For one, and this may sound creul, but its retirees will eventually die. There are 800,000 pensioneers that rely on GM, or a small city. They will die soon, and GM can be relieved of some of the costs. For another, GM is an industry leader in hydrogen fuel cell technology and concept cars. That won't save the company from its mess, but it will make it different. Finally, it controls GMAC, which, if it were its own business, it'd be one of the most profitable financial firms out there. As long as it has that, it has a profitable vehicle to help customers buy their cars.

Of course, employees at Delphi will be safe jobwise as long as they are in the higher-tech/complex manufacturing divisions of the company. If anything, those sectors will do well due to the heavy degree of insourcing from foreign automakers. Perhaps they can be spun off of the aging relic in to something successful.
Yeah, but for the most part, foreign automakers only do assembly here. I don't see why any auto firm would make high tech parts here that it can do far more cheaply in Asia or Eastern Europe (Volkswagen just opened a new plant in Slovakia). If America has a future in manufacturing, it is in highly mechanized things that aren't labor intensive, like chips. Of course, that would sorta defeat the purpose of preserving manufacturing jobs, which it wouldn't. However, I feel that anyone looking for a job in manufacturing at anything other than a hi-tech level is barking up the wrong tree. They have a better future as plumbers or handymen or something.

Yeah, but for the most part, foreign automakers only do assembly here. I don't see why any auto firm would make high tech parts here that it can do far more cheaply in Asia or Eastern Europe (Volkswagen just opened a new plant in Slovakia). If America has a future in manufacturing, it is in highly mechanized things that aren't labor intensive, like chips. Of course, that would sorta defeat the purpose of preserving manufacturing jobs, which it wouldn't. However, I feel that anyone looking for a job in manufacturing at anything other than a hi-tech level is barking up the wrong tree. They have a better future as plumbers or handymen or something.

That's what's being expanded in the US, the high tech computer components, complex parts, and related technology manufacturing. Really, other than machinery, high-tech manufacturing is the only sector that's consistently expanding. Biotech and nanotechnology are going to be the next big booms in the US, at least looking at how the sectors are developing.
Telecoms/IT are also going to be the economy of the future, but they too are vulnerable to outsourcing as the world economy develops more in line with the US.

The time when you could just get a job working in manufacturing is pretty much over. The people who will be employed in these fields will require much more education and training, and there will be fewer of them. Of course, this trend has long been in place (85%+ of workers in the US aren't in manufacturing, and only 5% of workers are actually on the production line), so it's not as dire as it sounds...unless you don't reposition your economy to this change.

That's why Texas, New York, and California are doing so much better economically than Michigan, whose economic model is still mired in 1960's Big Labor/heavy industry.

That's what's being expanded in the US, the high tech computer components, complex parts, and related technology manufacturing. Really, other than machinery, high-tech manufacturing is the only sector that's consistently expanding. Biotech and nanotechnology are going to be the next big booms in the US, at least looking at how the sectors are developing.
I hope so. My biotech stocks are showing no returns so far.
Telecoms/IT are also going to be the economy of the future, but they too are vulnerable to outsourcing as the world economy develops more in line with the US.
I doubt that telecoms will be big for long. VOIP will make things dirt cheap, and pretty soon, their biggest moneymaker will be telecom equipment. However, I do see a future for telecoms in space.
The time when you could just get a job working in manufacturing is pretty much over. The people who will be employed in these fields will require much more education and training, and there will be fewer of them. Of course, this trend has long been in place (85%+ of workers in the US aren't in manufacturing, and only 5% of workers are actually on the production line), so it's not as dire as it sounds...unless you don't reposition your economy to this change.
Yeah, it won't be a dire change. Only about 15% of the US workforce works in manufacturing, and it may only be half of that when you account for the deskjobs needed at a factory. I'm just worried about the effects on the workers' themselves. Normally, I don't get this compassionate, but many of the displaced factory workers don't have anything beyond a high school education, and they are paid high. That may, of course, be artificially high. Bethlehem Steel, I remember, paid some workers $80,000/year. But you gotta admit, with wages like that being paid, that must've been a real boost to the ecoonomy. And now that those jobs are dissapearing, so is the pay, and the spending.
That's why Texas, New York, and California are doing so much better economically than Michigan, whose economic model is still mired in 1960's Big Labor/heavy industry.
I wish this were true. Living in upstate NY, I know things are worse elsewhere. But they aren't great, here. In my city, Rochester, for instance, we have three local giants: Kodak, Xerox, and Bauch & Lomb. Xerox is pretty successful these days, and Bauch & Lomb is making a slow comeback, but the largest, Kodak, is falling apart. They had in Rochester the single largest manufacturing complex in the Northeast. Now they've closed or sold half of it. I realize that Kodak has made some very poor choices, and they are paying for it, but they have taken a city with them for the ride. There are even rumors now that Kodak will liquidate itself very soon, though I personally doubt that will happen.
In fairness, though, I will admit that there is great potential. We have the University of Rochester, which churns out patents and businesses like there's no tommarow. Kodak also made extensive investments in developing scientific equipment and its own optics department, and while it is shedding them, several firms are attracted by our knowledge base. We can transition, but as I just told you, it ain't gonna be easy.

I don't take it as critism. But I really feel that big labor must be a bit more flexible with big business. They complain about pay cuts and benefit cuts now, but it'd definitly be better than the loss of the company they may get later on. Today's bankruptcy is not reassuring.
Still, these car companies are lightyears behind foreign automakers in labor relations. That's why the big Japanese three are moving production to the US. The autoworkers' unions can be dealt with, as they've learned, and the labor costs for foreign operations in the US are lower than American ones in the US. The big American three, on the other hand, never had it good with the unions. Remember a few years ago when GM workers went on strike? That legacy hasn't left.
I imagine the UAW would be willing to listen to the requests from automakers, etc. if they had some reason to believe that management was willing to bear some of the burden, but history has shown that management gets big bonuses while the guy on the line gets laid off time and again. No wonder they're not willing to give--I wouldn't be. It's like being in an abusive relationship--eventually you've got to stand up for yourself.