Tuesday, January 10, 2006

Delphi Part 3

Most of the news organizations covered the Delphi UAW picket line at the auto show. Surprisingly, they got most of the facts right.

But you know, there's a few facts that haven't really been published, at least with the usual fanfare. Here are a couple...

  • Delphi lost over $5 billion last year. By one account, if the 30,000 workers earned an average of $27 an hour, that's only $1.685 billion in wages. This means that Delphi's managers through their mismanagement lost the company $3.315 billion. It doesn't seem that the worker's wages are the real problem here.
  • I heard on the radio that one of Delphi's business assumptions was that the business volume from GM purchasing Delphi components would remain the same or increase through the years. That way, they could support the employee's pension and wage structure. What business model was this? From the School of Business Fantasy? This business model was a recipe for ultimate failure.

The biggest problem that everyone seems to have with this sad chapter in American business is that the executives get rewarded for screwing up the company, and the workers get nothing but the unemployment line.

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