GM faces threat to supply of Delphi parts

[ozymandius]

Delphi Corp. turned up the pressure on General Motors Corp. to fund a bailout of the insolvent automotive parts supplier by asking a U.S. bankruptcy court to cancel more than 5,400 money-losing parts contracts with GM.

The automaker, already battling falling U.S. sales and losses totaling $10.6 billion last year, now must contend with the threat that its largest supplier could stop shipping parts unless it pays more.

-cut-

GM will not immediately need to find other suppliers to replace Delphi. Delphi expects its motion to reject the contracts to be heard at a May 12 bankruptcy court hearing, giving Delphi and GM 42 days to continue negotiations.

GM has been stripping away business from Delphi for years, and last week the automaker stopped buying spark plugs made at Delphi's plant in Flint. But shifting billions of dollars in parts business to other suppliers would take at least a year, said Van Conway, a partner with the corporate turnaround firm Conway, MacKenzie & Dunleavy in Birmingham.

more...

http://www.freep.com/apps/pbcs.dll/article?AID=/20060401/BUSINESS01/604010327/1014/BUSINESS

[UpInArms]

1. related WP article:

GM Still Pays the Price For Get-Tough Tactics in '90s

Those in the business of selling everything from brakes to bumpers can just about pinpoint when their already tense relationship with U.S. automakers began showing signs of extreme strain: 1992.

That's the year General Motors Corp. lost $23 billion, initiated a shake-up in its corporate ranks and named the penny-pinching J. Ignacio Lopez de Arriortua as chief of purchasing. The hard-nosed negotiator called his subordinates "warriors" and made them wear their watches on their right wrists, a reminder of the changing times.

<snip>

But in the 1980s, as the growing popularity of Japanese cars began eating into the Big Three's profits, U.S. automakers were reluctant to pass on the cost to customers for competitive reasons and began pressing suppliers to cut prices, a pattern that continues today even as the production costs keep climbing, DeKoker said.

From 1998 to 2005, the cost of steel went up more than 30 percent and the cost of health care jumped more than 40 percent, he said. Yet the price of U.S. vehicles dropped by 3.5 percent on a constant dollar basis.

Meanwhile, U.S. automakers were losing market share to foreign companies, and their profit per vehicle kept slipping. For example, GM lost $1,227 on every vehicle it made in North America in the first half of 2005, while Toyota Motor Co. made a profit of $1,488, according to Harbour Consulting of Troy, Mich.

...more...

The WP Headline should have referred to the 80's - not the 90's (more of the "Blame the Clenis" crap - but the entire article is worth a read.

[leftyladyfrommo]

2. This will hit KC hard.

We have a big GM plant here.

People who worked there on the Assembly line made really good money - and also spent a lot of money.

[54anickel]

3. Tower (formerly AO Smith) just closed up shop here in Milwaukee

There's a Delphi plant in nearby Oak Creek that looks like it will be closing soon too.

http://www.jsonline.com/story/index.aspx?id=412219

snip>

City officials hope to redevelop the 140-acre Tower site, which is bordered roughly by W. Capitol Drive and W. Townsend, N. 35th and N. Hopkins streets. The Common Council in 2005 designated it a redevelopment area, and officials are using a $250,000 federal grant to create a plan for the property. Much of the plan's success will hinge on the city's ability to get more federal money to help with an environmental cleanup that could cost millions of dollars.

snip>

Tower was a rising star in the auto industry when it bought A.O. Smith's frame-making business nine years ago. About 3,000 people worked at the Milwaukee plant then.

But by 2002, employment had shrunk by more than 60%, and in February 2005, Tower filed for protection from creditors in bankruptcy court, saying it was being hurt by lower auto production and high steel prices.

The end for Tower in Milwaukee came in two steps. Last summer, hundreds of workers lost their jobs after the Chrysler Group, which had been getting Dodge Ram frames from the company here, decided to buy them from a Mexico-based supplier partly owned by Tower.

snip>

"After A.O. Smith sold it to Tower, they just started breaking it up piece by piece, started shipping it away," Ballard said of the frame production work.

more...


http://www.jsonline.com/story/index.aspx?id=412307
Oak Creek could lose Delphi jobs
Unions say only 4 plants likely to survive bankruptcy

snip>

Local impact
State and local agencies are standing by to assist Delphi workers and the Oak Creek community should the company reduce or close the plants. The company has deep roots in the Milwaukee area, tracing back more than 55 years to an east side factory for the AC Spark Plug Division of General Motors. The business later became part of Delco Electronics, which merged with Delphi before being divested from GM.

The Private Industry Council of Milwaukee County has begun an economic impact study to assess possible loss of about 500 jobs through the Pentagon's proposed closing of the 440th Airlift Wing, also in Oak Creek. Gerard Randall, CEO of the publicly funded agency, said that study will be expanded to look at potential damage from cutbacks at Delphi.

Al Foeckler, president of the Oak Creek Common Council and in whose district the vast Delphi complex rests, said he wasn't sure what the city could do for the workers at this point but felt that action is imperative.

"The people living in our neighborhoods have the potential of losing their jobs," Foeckler said. "It's a dramatic impact to the city."

more...

[UpInArms]

4. here's the list

from yesterday's SMW:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=2199497&mesg_id=2200586

U.S. UNION SITES TO BE SOLD OR CLOSED (BY STATE):

ALABAMA - Athens, Cottondale, Gadsden

GEORGIA - Fitzgerald

INDIANA - Anderson

MICHIGAN - Adrian, Coopersville, Flint, Saginaw (E&C) and Saginaw (Steering)

MISSISSIPPI - Laurel

NEW JERSEY - Brunswick

OHIO - Columbus, Home Avenue (Dayton), Kettering, Moraine, Needmore Road (Dayton) and Sandusky

TEXAS - Wichita Falls

Wisconsin - Milwaukee (E&C) and Milwaukee (E&S)

[WhiteTara]

8. but but but the economy is picking up and

unemployment is down. Why do you keep bringing up these closings? Do you hate Amurka? Everything is fine, so add some to your mortgage, and use interest only payments. :rofl::hi:

[gizmo1979]

7. The Tower closing is really sad

that plant had operated for over 100 years!I don't think this is progress and a booming economy the way economists say it is.The politico's just sit around and let the middle class shrink and shrink.If we could manage a protest like the latino's I'll bet they wouldn't stay sitting on their hands for long.This is a really sad part of our history right now middle class jobs are leaving at an alarming pace soon we'll all need two jobs to replace the onwe we lost.

[BiggJawn]

5. My ESSO's B-I-L works for Daimler.

He was told that his job is being done away with in Kokomo, but he MAY be able to transfer to either Kenosha or St. Louis.
He just got back from a road trip to both places and came back empty-handed.

And I just listened to Il Douche talk about how "Letting you keep more'n yer own MUNNY!(tm)" is improving the Economy. Why, the Economy grew THREE PERCENT last year!

But there wasn't anything left by the time that 3% "dribbled down" to OUR pockets....

The Monied Aristocracy is doing just fuckin' GREAT, us Working Poor need to wake up.

And what is the UAW doing about this?

[goforit]

6. Yes, this could be the straw that breaks the camel's back.