The Finch Formerly Known As Gold

12 October 2005

Delphi as an oracle of sorts

In the 1990s, General Motors spun off its parts business to a separate company called Delphi. This past weekend, Delphi's US operation filed for bankruptcy. What does this portend? Peter M. DeLorenzo, in his capacity as the Autoextremist:

[The bankruptcy of] Delphi, in effect, is the equivalent of the canary in the mineshaft, signaling an entire industry — and the nation — that the domestic auto industry is at the precipice of unthinkable disaster. Detroit is competing at a dramatic disadvantage in every phase of the game — and its stratospherically out-of-whack cost structure is just one part of it. The other part lies in the predatory trade policies, currency manipulation practices and home market protectionism as practiced by Japan, Inc., Korea and China that Detroit is dealing with on a daily basis.

Given the fact that something like one out of every eight jobs in this country is connected somehow to the automobile, this isn't good news for anyone. And where Detroit goes, so goes the nation:

The implosion of Detroit will also be a dramatic wakeup call for the nation itself. This country cannot continue on the path it's going without dealing with the fundamental issues of health care and pensions. And our government simply cannot continue to allow its trading partners to competitively exploit our industries — to the long-term detriment and deterioration of our own manufacturing base.

The Delphi bankruptcy marks the beginning of the end for an industry and a way of life, as we know it. It also affords this industry and the country a golden opportunity to reinvent and reposition itself for a brighter, more competitive future.

When one door closes, another opens. But look for some folks to figure out a way to jimmy the locks.

Posted at 8:23 AM to Driver's Seat

Hm, this comes on top of the realization, not so long ago, that GM as a group has effectively zero market value, when you properly account for its pension liabilities.

We'll see more of this as time goes on, I suspect, and not just in the U.S., but in Europe and Japan as well.

Posted by: Michael Turner at 2:47 AM on 14 October 2005

Pension liabilities? Couldn't you be more realistically blame the upper management that's responsible for the "death by committee" of any idea that might have turned our auto makers into more efficient organizations that can adapt to new challenges?

No, that would, in turn, challenge the "oiligarchy" that's currently sporting bumper stickers that say "Please Lord bring back the oil patch, I promise to not piss it all away this time" and "urban planning" that has largely ignored the mass-transportation issues that we can see exemplified by our roads and bridges in Oklahoma..

--Proof that chaos theory has a basis in fact..

Posted by: Captain And at 10:22 AM on 15 October 2005