31 March 2006
Down from the Fourteenth Floor
Does the end of General Motors start today?
Motor pundit Robert Farago thinks so:
At 9:30am [this] morning, a group of lawyers representing bankrupt auto supplier Delphi will appear in front of a federal judge. The lawyers will file legal motions for Sections 1113 and 1114. It's a legal request to void Delphi's current collective bargaining agreements with the United Auto Workers (UAW). The moment the judge says the word "granted," he will terminate the wage structure, post-retirement health care and life insurance plans for the company's 33k US hourly workers. The UAW will respond with a strike against Delphi. Starved of its former subsidiary's parts, GM's assembly lines will fall silent. The General will begin its final slide into Chapter 11.
Of course, this won't happen instantaneously:
There will be a gap between Delphi's filing, the judge’s final ruling (May 8th) and industrial action. During this highly fraught interregnum, as the entire Detroit-based automobile industry stares into the abyss, Delphi President Steve Miller may make a fourth wage and benefits offer to the UAW. The proposal would fall somewhere between the workers' current compensation ($27 per hour) and Miller's last last stand ($16.50 per hour). As we've said before, the UAW will accept nothing less than the status quo, and that's somewhere where Miller won't go at least not without GM footing the bill. Common sense says if GM CEO Rick Wagoner was going to ride to Delphi's rescue perhaps buying back Delphi's domestic plants to maintain the UAW's current deal he would have done so already. Chances are he can't.
Not that The Rick wants to see the status quo vis-à-vis the UAW maintained; it's killing him just as surely as it's killing Delphi.
If you give any employee a choice between gold and silver, they will take gold. But if your choice is between lead and silver, silver looks pretty good.
I think I'll buy zinc futures.Posted at 6:21 AM to Driver's Seat