By on February 6, 2009

If you’re familiar with Delphi—a former GM division with the words “bankrupt since October 10, 2005” over the door—then you’ll know that they’re a not-so-hidden cancer on GM cancerous corpse. Even as The General seeks to survive with a federal IV stuck in its metaphorical artery, it continues to peel off just enough cash—now your cash—to keep the parts maker making parts. For vehicles no one’s buying; but that’s how the industry doesn’t roll these days. So, some bad news from the oracle then. First, GM’s told their pals at the SEC (accounting scandal forgotten) that they’re accelerating a $50m payment to Delphi. [NB: Delphi had asked GM for a $100m hurry-up.] Can you say running on fumes? Delphi can. “The Company believes the amendment and accelerated GM support will enable it to preserve available liquidity given the difficult economic environment, particularly in the global automotive industry,” Delphi said in a filing with their pals over at the federal bankruptcy court. Judge Robert Drain, no less. And the cutbacks keep on happening!

The Detroit News reports that both of Delphi’s remaining U.S.-based white collar workers are about—or in DetN-speak “may”—lose their health care benefits. Just joking. Some 10k workers face this grim prospect. As Warren Zevon says, it ain’t that funny at all. [Speaking of "shared sacrifice," Delphi's UAW workers are exempt from this one.] Here’s the skinny.

Troy-based Delphi Corp. sought permission Wednesday from a federal bankruptcy court in New York to cancel retiree health benefits for current and future salaried retirees, a move that it says would save the company $200 million from 2009 through 2011.

The auto parts supplier also sought to end post-retirement basic life insurance benefits for current and future retirees.

The moves would allow Delphi to reduce its balance sheet liabilities by $1.1 billion. About 15,000 salaried retirees with medical and insurance benefits would lose coverage. The company wants to end coverage “as soon as (it is able) after March 31.”

Can they do that? They can do that. We’ve got several insiders within Delphi. It’s bleak. Unless the company gets a turn at the multi-billion dollar federal bailout buffet, Chapter 7 is only a matter of time, and not much of it.

And yes, Delphi still makes enough parts for GM to stop GM making cars if they stop making them. Which doesn’t seem quite as terminal as before, what with Uncle Sugar keeping the cash flowing. Until and unless your legislators pull the plug on GM. And then the whole house of cards will come crashing down.

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10 Comments on “GM “Accelerates” $50m Payment to Delphi; Delphi Cuts Health Care...”


  • avatar
    chuckR

    Portable infusion device… with the whole Boomer generation of codgers-in-waiting, not the dumbest move they could make.

  • avatar
    jolo

    Government will not let GM go under so they will also bailout Delphi. Nothing to see here, folks, move it along…

  • avatar

    jolo:

    Is this one of those seven degrees of separation deals? Or a multi-level bailout scheme?

    Talking to my wife last night, we decided that Uncle Sam should bailout the porn industry. And then the porn actors and actresses (insisting that the producers institute wage parity between the sexes). And then the porn distributors, who must certainly be hurting from all their S&M. I mean, a soft porn market. And then the companies who provide the porn: DVD makers, FIOS (this is big), etc. And, ultimately, the users. If they had more money to spend on porn, by God they’d spend it!

    Apropos of nothing, of course

  • avatar
    jpcavanaugh

    This should just be another wake up call for those who have spent their whole lives in the GM luxury suite. I understand retiree pensions. But retiree health benefits? I am self employed and pay over $1300 a month for good health insurance for my family of 5 – and with high deductibles too. Let me say that again – $1300 a month. Nobody is going to pay this for me when I retire. Most people in this country will not get free health benefits when they retire. Lots of them don’t get it while they are working.
    GM and the other big companies have treated their businesses as money factories for so long, they are shocked, I say shocked, that the gravy train can’t continue. Delphi is in BANKRUPTCY, for crying out loud, and has still been giving fee health insurance to white collar retirees. Blue collar too, I’ll bet.
    If during the last recession, these companies had reduced their retiree health benefits to, say, 50% and plowed the rest of the money into engineering and quality issues, we could all be in a whole different place.
    Note that this painful but necessary step is taking place in a bankruptcy proceeding, the only forum which can make the hard and painful choices that these companies have to make.

  • avatar
    jolo

    RF, definitely multilevel.

    Anybody and everybody who are associated to any of the bailout 1.45 are going to show up with their hands out, with the threat that no money means they will make the government look bad by shutting down their automaker of choice.

    Too many congressfolk will do everything to keep their reputation intact, especially since when it comes to the automakers.

  • avatar
    PeteMoran

    Judge Robert Drain.

    TTAC needs a car industry Aptronyms Watch.

  • avatar

    Where’s that extra “r” when I need it?

  • avatar
    netrun

    I’ve been waiting for the Delphi Ch.7 filing since November. Do you think I have to wait much longer? My company stands to benefit .. to the victor go the spoils of war.

  • avatar
    vitek

    Since Delphi is in bankruptcy proceedings, can’t they petition the judge to allow them to cut benefits for their UAW workers? Imagine what would happen if Delphi did petition for that and asked that they be allowed to cut them back to the level of the workers at the US transplants.

  • avatar
    car_czar

    How did they hang on to the benefit this long?

    The D3 cut their salaried retiree health care for those over age 65 last year. New hires after the early 90’s don’t get any retirement health care benefits at all.

    http://m.wkyc.com/news.jsp?key=52197


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