Sunday, October 09, 2005

Excessive Spending - I got mine

The following are self explanatory:

Delphi demands 63% pay cut from UAW

October 7, 2005


Delphi Corp. has demanded such drastic cuts in wages and benefits for workers that, according to one UAW local , its members would no longer be able to afford the cars they help build.

Delphi has threatened to declare bankruptcy unless it gets concessions from the UAW and aid from former parent General Motors Corp. The demands, according to newsletters sent to UAW locals, include:

•Reducing pay by as much as 63% to $10 to $12 an hour and total wages and benefits by as much as 77% to $16 to $18 an hour. Delphi currently pays its union workers from $25 to $27 an hour and total wages and benefits of $65 to $70 an hour, making its employees among the best-paid industrial workers in America.

•The right to close, sell or consolidate most of its U.S. plants over the next three years.

•Ending all cost-of-living pay increases.

•Eliminating pay during the Independence week shutdown in July.

•Eliminating the jobs bank, under which Delphi guarantees the pay and benefits for unnecessary workers.

•Reducing holidays to 10 to 12 days per year, down from about 16.

•Reducing vacation to a maximum of four weeks per year.

•Increasing employee contributions for health care to match the salaried plan by increasing doctor and prescription co-pays and other measures. Delphi hourly employees pay about 7% of their health care costs, compared with the 27% paid by salaried workers.

•Changing pensions to reflect the lower wage rates by cutting them to less than $1,500 a month instead of the current rate of about $3,000.

According to a flyer sent to at least two UAW locals Thursday, the company is asking for wage cuts of as much as 63%, to $10 an hour, and for workers to pay 27% of their health care costs versus 7% currently
Delphi execs get severance boost

October 8, 2005


With reports circulating that Delphi Corp. could file for bankruptcy as early as today, the company promised about 21 of its top executives Friday that they'd get more money if they are fired or laid off.

THE WORKERS: Take a 63% cut in pay? First reaction is anger
The Troy-based maker of almost every part you'll find on a car, from brakes to satellite radio receivers, wants to encourage those leaders to stick with the company, even if it files for bankruptcy. Delphi is the nation's largest auto supplier and the fourth-largest company in Michigan.

But the richer benefits for top executives were just another insult to many of the company's blue-collar workers, who found out Thursday that the company wants to cut their pay as much as 63% and reduce health care and retirement benefits.

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There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
... The Government is on course for an embarrassing showdown with the European Union, business groups and environmental charities after refusing to guarantee that billions of pounds of revenue it stands to earn from carbon-permit trading will be spent on combating climate change.
The Independent (UK)

Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)