![\"Since the times of Deucalion 1, who survived the Flood and after coming to Mount Parnassus received instructions from Themis as to how to populate the desolate earth, the Oracle at Delphi received many inquiries, answering them in both prose and verse. Even though the oracles were clearly spoken by the Pythia, not always were they properly understood.\"](https://www.thetruthaboutcars.com/wp-content/uploads/2008/08/delphi5916.jpg "\\"Since the times of Deucalion 1, who survived the Flood and after coming to Mount Parnassus received instructions from Themis as to how to populate the desolate earth, the Oracle at Delphi received many inquiries, answering them in both prose and verse. Even though the oracles were clearly spoken by the Pythia, not always were they properly understood.\\"")
GM spinoff Delphi has been struggling to exit bankruptcy for over three years. The Wall Street Journal reports the supplier is in danger of being liquidated completely. At the heart of Delphi's problems: $14.5b in pension liability, underfunded by $3.3b. Under the terms of its spinoff, General Motors retained responsibility to fund those pensions– an agreement that has cost GM $11b in cash and writedowns. A tsunami of red ink prompted the Pension Benefit Guaranty Corp to press GM to take over $1.5b of the liability next month. GM CFO Ray Young says basta! "[Delphi has] to understand there is only so much that we can do. They're going to have to do their own form of self help here." Self-help or self-destruction? If Delphi's pension fund fails, the PGBC has an $8b lien against Delphi's [profitable] foreign business, which wouldn't prevent cuts to retiree benefits. Meanwhile, the supplier's struggling U.S. plants would likely be "spun back" into GM. Delphi is, as always, committed to crafting a new reorganization plan. But if they can't pull it off, this could be the straw that breaks GM's back. To say nothing of Delphi's 159k employees.
Find Reviews by Make:
Read all comments
“GM CFO Ray Young, “(Delphi has) to understand there is only so much that we can do. They’re going to have to do their own form of self help here.””
Erm…is this the same GM who is looking for a bailout partnership with the government?
Yes, it looks like a little bit of tough love from GM – but only one way, of course. And besides, doesn’t the settlement makes GM responsible for the pension fund? GM wants to drop it like it’s hot… hm… but I wonder if it’s cheaper to pay the lawyers or to pay the pension?
The more I think of it, the more it seems that when GM spun off Delphi, they did it to get rid of some heavy burden of debt. I think they knew beforehand that Delphi couldn’t stand on their own.
How come the big three can’t just use the same suppliers their competitors(Honda, Toyota) use?
I think they knew beforehand that Delphi couldn’t stand on their own.
No doubt about it. Ditto for Ford. At the time, all sides were waxing enthusiastic about how Delphi was going to grab some business from Ford while retaining the GM stuff, and of course Visteon was going to mirror that by getting GM business. Might be a hole in that logic somewhere; let me think about it. As I remember, when Delphi filed, the GM spinoff of them specified a period of years during which GM retained an obligation for pensions, and that period was nearly expired. But not quite. So GM miscalculated on the optimistic side (can you believe it?), and is holding the bag.
Why can’t Delphi just merge or be absorbed by another company?
rtz: Would you marry someone with ten kids to feed, a boatload of debt, and emotional baggage up the wahzoo?
rtz: Would you marry someone with ten kids to feed, a boatload of debt, and emotional baggage up the wahzoo?
Plenty of people like that on Jerry Springer to choose from, they usually come with a cool trailer and welfare checks.
The answer has always been obvious. GM didn’t want the old Delco parts division because it didn’t make money. With the same unions and plants, how is the next person going to make money? At least when GM owned them, they had to pay that division it’s costs. Again, GM and Ford bought some time but the chickens are now home to roost.
All one can do is laugh. These folks would not settle on a realistic contract, fighting with a company that needed help, and tons of it. Now the end is near and who feals bad? Not me. This is what happens when fat lazy union workers want more for doing less and put their future and faith in the hands someone else(who obviously couldn’t handle it). Sorry if i am being a little rough, but something about this whole Delphi thing strikes a chord.
I love GM! If only for the reason that they suck so bad! I could crash my car into a busload of nuns and send all of us careening over a cliff, and at my funeral they would still be able to say, “Well, at least he wasn’t a part of GM.”
Delphi is like the zombie in a bad horror movie. It just keeps coming back to bite…
rtz asks:
How come the big three can’t just use the same suppliers their competitors(Honda, Toyota) use?
They do. Delphi sells to almost all the car makers, it’s the product mix and %s that are different.
rtz also asks:
Why can’t Delphi just merge or be absorbed by another company?
They can, if someone wants to pay top dollar. Top dollar compared to pennies on the dollar when they go chapter 7.
Who in their right mind would want to saddle themselves with the disastrous mess that has been Delphi?
Their costs are out of line with their competitors, and the way the Detroit OEMs treat suppliers even high tech/high development cost parts are treated as commodities. So, there aren’t many good places to get decent returns on investment. If you do get decent returns, you can bet that purchasing will soon be knocking on your door asking for “give backs.”
It’s also worth mentioning that Delphi has decided to just plain shutdown their rubber parts business (engine mounts, bushings, boots, etc) and much of that business has been resourced to their competitors. From memory, a lot of those deals were done in July so the change over in production is many months off yet.
Let us understand this.
Annuities provided by private firms somehow did not have the proper legal protections and now the old folks are going to breadlines.
Oh yes now they should have been smart enough to have put the money in 401. But the annuities was reducing the the salaries and was going to provide an income stream.
Oh yes, the Social Security was increased to set aside some extra cash for a Social Security trust fund. But somehow the government with all it’s lawyers could not create a trust fund that could not be raided by the government. Now all that has to happen is the government needs to pay back the trust that it drained (double taxation). And by the way, While the baby boomers were trying to pay for the annuities, Social security, Social security trust fund, and the cost of college for their children that credit hour was incread from $10 to $300, they should have been smart enough to invest in a health care savings account and some 401. That has to survive the mortgage mess and the dotcom sandal.
As Ford copied GM when they spun off Visteon, I know the whole scenario was founded on false expectations – how could a UAW plant ever be competitive with the non-UAW plants?