By on October 6, 2009

here are two roads, most distant from each other: the one leading to the honorable house of freedom, the other the house of slavery, which mortals must shun. It is possible to travel the one through manliness and lovely accord; so lead your people to this path. The other they reach through hateful strife and cowardly destruction; so shun it most of all.

After four years in Chapter 11 protection, GM’s largest supplier Delphi is returning to the land of the living. For now. Along the way, though, Delphi racked up some impressive bills. Automotive News [sub] estimates that GM has spent $12.5b on Delphi during its bankruptcy, and has pledged a further $1b in debt assumption, $2b in forgiven claims and $1.75b in investments in the new company. For these (taxpayer funded) sacrifices, GM will get Delphi’s money-losing US operations and steering unit business. Delphi’s new owners Elliott Management and Silver Point Capital walked away from $3.5b in debt to assume control of the company, and $6.25b in pension obligations were dumped by Delphi and had to be assumed by the Pension Benefit Guarantee Corporation. Delphi’s bankruptcy alone cost $400 million in legal and professional fees. The new company’s manufacturing base has been migrated outside the US, and its main business will be in supplying electronics and air conditioning systems. Expected annual revenue is $10 billion compared to the $22.59 billion the firm earned in 2005, before entering bankruptcy. But rather than tut-tutting the waste, greed and ineptitude that has marked Delphi’s bankruptcy, let’s take this moment to remember the thousands of employees and retirees Delphi has cast aside in the name of rescuing the US auto industry. For, as the Sibyl of Delphi foretold in the 9th Century B.C.E., love of money and nothing else will ruin Sparta.

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7 Comments on “Delphi Exiting Bankruptcy...”


  • avatar
    John Horner

    Have a look at today’s NYT video reporting on how the Private Equity funds make money while often sucking the life blood out of the companies they touch.

    http://www.nytimes.com/packages/html/business/2009-private-equity/index.html

    These guys almost always come out on top even when the underlying business and its employees take it on the chin. Greed is good, so they say. I’m having trouble seeing the good. What is really happening is that a virtual union, or cabal, of well placed bankers has pushed the worker’s unions to the side and taken all the spoils. Meanwhile, the bankers keep telling everyone this is all for their own good. The PR genius of it all is that by effectively waging an anti-union information campaign the few who are taking all the spoils have convinced many struggling people that somehow this is all either good or inevitable.

  • avatar
    ihatetrees

    As someone in the vicinity of a Delphi plant, I’m somewhat familiar with the situation. This whole thing was disgusting – epic grade disgusting.

    My sympathies lie with middle managers who made the mistake of believing upper management regarding restructuring, severance and health care.

    Regarding the piece: Have UAW pensioners at Delphi actually taken a PBGC haircut? That’s not the case locally, from what I hear.

  • avatar
    info@carsinpedia.com

    Amazing how well the bankers will do despite the damage they inflict around them.

  • avatar
    DrX

    @John Horner

    Thanks for the link, I didn’t watch the video, but the accompanying article is an interesting read. Of course, a cynic might extend this line of thinking and come to the conclusion that the US government/treasury is yet another entity that’s in the process of being stripped and flipped by monied interests. But hey, I’m not a cynic…are you?

  • avatar
    JSF22

    The last time I saw Steve Miller, he was a lot more concerned about demanding two upgrades on a sold-out flight from Fort Myers to Detroit than he was about saving Delphi.

  • avatar
    MX5

    In response to ihatetrees the answer is NO the unions have not taken a haircut. The UAW – IUE/CWA unions have gone to the PBGC but GM topped up their retirements to full. I, on the otherhand, am a salaried Delphi retiree and I got the Fed-Ex letter last Feb. that my health care was being taken away. I went from paying $143 a month to $1495 a month in 30 days. That’s a hit on the budget. Can’t get insurance, heart condition. The union boys and girls today are complaining that they now have to pay $125 a month. At one time it was zero and then it went to $25.

    My pension is in the PBGC, I have to pay full for health care and we are totally ingnored by this administration that said retirees need to be treated better.

    Delphi is NOT an American company anymore and GM is only partly US made. The taxpayers gave them money and they closed plants. They moved some work overseas and also chose not to continue to buy some of their needs from US companies (tires). And yet, they believe they will find buyers here like the did in the past. Toyotas come from Georgetown, KY. and Honda’s come from Ohio. Z4′s come from Georgia. Need I say more.

  • avatar
    lw

    Assuming their cost structure is “fixed”, Delphi will start putting a lot of other suppliers out of business.

    Any supplier that competes against Delphi will need to seriously consider folding or doing a Ch. 11 to match them.

    It’s a lose/lose for everyone.


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