Monthly Archives: March 2006

Here is an interesting story. General Motors is willing to spend up to twelve billion dollars to get the UAW union out of its parts manufacturing business, Delphi Motar Parts. These union lackys were making $73.73 an hour including benefits. GM’s employee production was at an all time low and the employees, acting under the advise of the United Auto Workers Union, have been staging a work slowdown for the last three years. This has forced Delphi into bankruptcy. GM has decided rather then facing a strike by the union that would bankrupt Delphi, they would offer the employees $140,000.00 to retire and bust out the union. After Delphi gets rid of the union, they are going to move their entire operation to Canada and Mexico. All I can say is WAY TO GO UNIONS!!! Good one. Now you have successfully run another U.S. corporation out of America. JD

March 22 (Bloomberg) — General Motors Corp., struggling with mounting losses and eroding market share, offered buyouts of as much as $140,000 to a third of its U.S. factory employees and agreed with its biggest auto-parts supplier on ways to entice workers to retire.

The deal with the United Auto Workers reduces the chances of GM being crippled by a strike at Delphi Corp., its bankrupt former parts-making unit. GM last week said its costs for bailing out Delphi would be at least $5.5 billion. About 141,000 GM and Delphi employees would be eligible for the buyouts and retirement incentives.

“This marks the end of 20th Century industrial America and maybe, finally, the beginning of 21st Century industrial America,” said Sean McAlinden, a labor analyst at the Center for Automotive Research in Ann Arbor, Michigan. “Turning over an entire labor force has never happened on this scale.”

GM, the world’s largest automaker, lost $10.6 billion last year as U.S. buyers flocked to models from Toyota Motor Corp. and other Asian rivals with non-union U.S. labor. GM’s troubles helped push Delphi, its biggest supplier, into bankruptcy in October.

Delphi Chief Executive Officer Steve Miller still seeks to reduce wages to $12.50 an hour from $27. Delphi reiterated today that it plans to ask a U.S. bankruptcy court judge for permission to cancel contracts on March 31 if the company and its unions don’t agree on wage cuts by then. The UAW has threatened to strike if the contracts are thrown out.

`Collision Course’ Softened

“What this indicates is that GM’s participation can soften the collision course that Delphi and the UAW were on,” said Harley Shaiken, a labor professor at the University of California at Berkeley.

Shaiken said the toughest bargaining among the three parties lies ahead as they confront Miller’s demands to cut wages and close most of the company’s North American plants.

Moody’s Investors Service today said the deal was positive. The ratings company said it still may cut GM’s debt deeper into non-investment grade if the automaker doesn’t file its delayed annual report with the U.S. Securities and Exchange Commission by the end of the month as proposed and complete the sale of a majority of the General Motors Acceptance Corp. finance unit.

Standard & Poor’s today also said GM’s current non- investment grade rating is not immediately jeopardized by the costs associated with the Delphi agreement.

The $140,000 buyout applies to GM workers with at least 10 years experience, the UAW said in a statement today. Those with less experience can choose a $70,000 buyout. The Delphi accord would let 13,000 Delphi workers qualify for special retirement that pays up to $35,000 to some eligible employees, Delphi said.

Good, If True

“If GM and Delphi are truthful in their press releases and there are no side deals to lower the price of Delphi’s products or a deal that allows GM to make monetary claims against Delphi, this would be a very good deal for Delphi and it would be a fantastic deal,” said David Tepper, president of Appaloosa Management LP in Chatham, New Jersey. Tepper is Delphi’s largest shareholder.

Employees who accept GM’s buyout offer would keep GM pension benefits already earned and give up GM health care and other post-retirement benefits. A full GM pension for UAW workers is $36,000 a year plus medical coverage.

GM, with about 105,000 active U.S. hourly union workers, has about 36,000 workers with the full 30-years of eligibility to retire and Delphi has 8,000, Dan Flores, a spokesman for Detroit-based GM said. In addition, there are about 27,000 GM workers who are within three years of reaching the 30 needed to retire.

Jobs Bank

Delphi said today a total of 13,000 of its workers qualify for some sort of retirement incentive. Another 5,000 would be allowed to return to GM.

The $140,000 amounts to about 1.5 years of compensation for a UAW worker, said Morningstar Inc. analyst John Novak in Chicago. GM’s UAW workers earn total hourly pay, including benefits and pension, of about $73.73, Flores said. That includes an hourly wage of about $27, he said.

“It’s an interesting and potentially far-reaching deal, but we don’t know what the ultimate economic consequences will be yet,” Novak said in an interview. “If they can convince a significant number of people to take these offers, it would be money well spent.”

Getting workers to retire helps both GM and Delphi, a former subsidiary, reach goals faster of cutting costs and ending losses. GM announced plans in November to eliminate 30,000 factory jobs in North America by 2008. Delphi, which declared bankruptcy Oct. 8, is trying to cut about 20,000 jobs.

Shares

GM shares rose 1 cent to $22.01 at 4:16 p.m. in New York Stock Exchange composite trading. They gained 5.5 percent yesterday on news of an imminent deal.

GM said March 16 that a labor agreement at Troy, Michigan- based Delphi would probably cost the automaker $5.5 billion to $12 billion on a pretax basis. The expense will probably be at the lower end of that range, GM said last week. The automaker already has set aside $3.6 billion for the costs, and has twice raised its estimate of the expense since October.

Getting workers to retire early would create job openings in GM plants for idled workers from Delphi, said McAlinden.

The openings might result in thousands of people leaving a “jobs bank” program that pays union members when there’s no work for them. GM agreed when it spun off Delphi in 1999 to take back some workers if the partsmaker became unable to give them jobs. GM also agreed to cover pension costs for former GM workers if Delphi couldn’t.

GM’s active workforce doesn’t include another 8,000 that are in the jobs bank or inactive because of disability or other reasons.

Things Changed

“At one point in time we did try to create as many jobs here as possible, and in doing so we probably did make the company less competitive and less effective. After we finally realized that, the goal become trying to take care of as many people as we could take care of,” said Joe Buckley, president of UAW Local 696 at a Delphi brake plant in Dayton, Ohio.

“The people who have dedicated their lives to this union are asking ourselves on a daily basis, `Is there something we could have done different that would have maintained greater employment?”

The threat of a strike at Delphi is just one of many challenges facing GM CEO Rick Wagoner, who is contending with his company’s debt being rated as junk, an SEC investigation of accounting practices and pressure from investors such as billionaire Kirk Kerkorian to end five straight quarters of losses, the longest stretch without a profit since 1992.

Bonds

Delphi’s 6.55 percent note due in June rose 0.5 cents to 66.5 cents on the dollar. The note has no yield because it’s in default. GM’s 8.375 percent bond due in 2033 fell 0.9 cents on the dollar to 74.6 cents on the dollar, yielding 11.4 percent, up from 11.3 percent.

The annual cost to insure $10 million of GM debt for five years using credit-default swaps fell to $1.7 million upfront plus $500,000 a year, from $1.78 million yesterday, according to Deutsche Bank AG prices. The price has dropped from as much as $2.4 million upfront in December.

Ford’s Buyouts

GM’s buyouts are more generous than those offered so far at Ford Motor Co. The No. 2 U.S. automaker is trying to cut 30,000 jobs and shutter 14 plants by 2012 in North America.

Ford, of Dearborn, Michigan, on Oct. 1 took back 23 plants and offices from Visteon Corp., its largest supplier and former subsidiary. The facilities included plants that employ about 18,000 UAW-represented workers. Ford plans to sell most of the plants and is offering buyouts to about 5,000 workers.

Workers assigned to plants that Ford sells will receive their present wages and benefits. Ford will make up the difference between a buyer’s wage scale and what workers currently earn.

Ford this month began offering five separate separation plans to UAW-represented workers at a St. Louis plant scheduled to close, spokeswoman Marcey Evans said in an interview. The buyouts would take effect April 1.

One plan would give workers $15,000 a year for four years of college and provide full medical benefits and half their regular pay while they go to school. Another option is a $100,000 cash payout without health benefits. The five plans are also being offered to workers in the plants Ford took back from Visteon, she said.

DaimlerChrysler AG’s Chrysler unit has no plans for buyouts like those being offered by GM and Delphi, Chrysler spokesman David Elshoff said.

This is a good one!

Two Days, Six Crashes and 80 Suspected Illegal Immigrants Taken Into Custody

By JONANN BRADY

March 21, 2006 — In a matter of 24 hours, dozens of suspected illegal immigrants were involved in six separate car crashes on icy roads in Colorado, according to police. Immigration officials say the suspected immigrants were being smuggled from Mexico into the United States.

Two additional vehicles — one carrying 20 suspected illegal immigrants, the other 11 — were pulled over by authorities on Tuesday but were not involved in wrecks, said the Colorado State Patrol.

“This time of year, it’s pretty common to have this type of traffic,” said Carl Rusnok, a spokesman for Immigration and Customs Enforcement.

Troopers estimate they encounter more than 500 undocumented immigrants weekly on Colorado highways. At this time of year, many Mexicans enter the United States to look for work at the beginning of the growing season.

Rusnok said at least two of the vehicles embroiled in the accidents were headed for Chicago and Florida.

“This is something we investigate seriously and try to get to the smuggling organization responsible,” Rusnok said.

Immigration a Hot-Button Issue in State

All told, 80 suspected illegals were taken into custody within a 24-hour period.

The Colorado State Patrol said two vans — one carrying 16 suspected illegal immigrants, the other carrying 12 — rolled early Tuesday morning near Brush, Colo., about 80 miles northeast of Denver.

Also early Tuesday morning, another Suburban carrying 10 people rolled over on Interstate 70, about 110 miles east of Denver,

No injuries were reported in those accidents.

Forty-two suspected illegal immigrants were taken into custody on Monday after two separate crashes on I-70 and I-75 in Colorado.

Several of the men involved in the crashes were “voluntarily returned” to Mexico, said Rusnok. Voluntary return is offered to illegal immigrants who don’t have criminal records, he added. The drivers of the vehicles suspected of smuggling the men are being held in federal immigration court.

Immigration is a hot-button issue in the state, and several anti-immigration groups are active there, including the Minutemen, Colorado Alliance for Immigration Reform and Defend Colorado Now.

Colorado State Sen. Peter Groff is sponsoring two bills that would make smuggling and trafficking a felony. Violators would face five years in prison.

In Washington, Rep. Tom Tancredo, R-Colo., heads a caucus that has vowed to derail President Bush’s guest-worker plan and any legislation that smacks of what he calls amnesty for illegal immigrants.

ABC News’ Denver affiliate and The Associated Press contributed to this report.