Delphi Bankruptcy

Death Blow to the UAW and Organized Labor?

It’s been almost 70 years since the Battle of the Overpass started Henry Ford and the auto industry down a collision path with organized labor and the UAW.  For many years America’s unchallenged industrial might, churning out the worlds most advanced products, was a rising tide that lifted all boats.  The UAW, going along for the ride, was able to extract excellent wages and benefits for its employees.  But the closing of the 20th century and the dawning of the 21st century brought on a fierce global competitiveness that slaughters every business with a cost structure out of line with its competitors.

It was into this challenging environment that Delphi was born, a child of General Motors in 1999.  Right from the start, Delphi was saddled with GM labor entitlements that GM knew to be unsustainable.  Last year, Delphi’s new UAW labor agreement set out a 2 tier wage structure with wages for new hires more in line with the Tier 1 competition, but grandfathered existing employees into the richer legacy programs.  Delphi just needed enough time to retire all the high priced help.  But, competitors didn’t allow Delphi this luxury and on Oct 8, Delphi went into Chapter 11 bankruptcy protection.  Steve Miller’s plans for Delphi to emerge from Chapter 11 call for painful concessions from the union.  

These concessions are not of the piddling few percent the UAW and Delphi have become accustomed to haggling over.  They are the kinds of discounts that customers of General Motors have been demanding lately before they will walk out of the showroom with a new set of wheels.  

The UAW union has been strangely silent as salvo after salvo of Delphi bad news has hit them.  With the vacuum left by the union silence, workers are taking matters into their own hands, with union-like splinter and dissenter groups like www.futureoftheunion.com operating outside of the auspices of the UAW.  Under normal circumstances ignoring these dissenters works, but these are no ordinary times.  Rank and file workers are using the speed of the internet to organize themselves much faster than the UAW can react.  Once the UAW’s base deserts them, alternative organizing strategies cannot be stopped.  

In 1990, the Soviet Union and the Warsaw pact lost control of its citizens with the end result being their collapse and the fall of the Berlin wall.  While I don’t draw any parallels other than control of a deteriorating situation, the UAW is losing control of its members as well, and the end result will take down the leadership of the UAW.  

On one hand it may be good for the UAW to collapse, but in a vacuum, unexpected things happen.  The General, Ford and Daimler Chrysler would also be in play.  With the UAW in place, you know who you are negotiating with, but if the UAW collapses, chaos will reign for a time.  Steve Miller is playing a high stakes poker game, with the future of the US auto industry.  Let’s hope he and labor are able to come up with a handful of aces.