GM spun off Delphi and Ford spun off Visteon so they could buy cheaper parts from someone else.

IIRC, part of the GM/Ford Financial Wizards reasoning for spin-offs was that these internal businesses were “good” at what they did, so maybe they could sell to other companies. That strategy turned out to be a disaster too.

Moving liabilities had a bit to do with it too, in the finest of Enron-esk traditions….

@commando1,

GM spun off Delphi and Ford spun off Visteon so they could buy cheaper parts from someone else. Unfortunately, the spin-off agreements and their inability to outsource enough parts left them paying high prices for most of their parts and paying billions for parts no longer supplied simply to keep Delphi and Visteon in business. In the end, they may have been able to show a net positive from this due to some accounting shenanigans but I doubt the actual costs were lower.

This isn’t different from what Ford did several years ago in taking back ~12 Visteon plants under ACH-LLC.

Heck, I hope when the Sun Li Donut Shoppe down the street goes under Obama comes in and bails her out. They make the best apple fritters on earth – at 89¢ each a helluva bargain. Sun Li is too big to fail IMHO.

Then again Sun Li is very likely a competent business person, so she, like you and me, will be stuck paying taxes to keep incompetence afloat, alive, and well, and making fat salaries.

Cuz that’s the American way. Just ask Sun Li.

Will someone remind me again why GM created Delphi and then spun them off??????

It was done to eventually send the company into chapter 11 so it could show the auto companies how to threaten the unions with liquidation if they did not capitulate their high costs.

Plain and simple. And it has worked beautifully.

Right on Ronnie.

The perpetual hand wringers alwaays miss this in their dream of “equality”. In it’s name they destroy “prosperity” and ensure a lower, but more “equal”, living for all. Yay.

Bunter

You stole my question…

What inte the wide wide world were they trying to achieve? They spun off an obviously money-losing operation, in the hope that it would become someonelses problem. And then they failed, four years of bankruptcy later, they have to take it back again? What happened?

Sure the union fed millions to the Dems… They got that money from active member dues. This is game over on that front.

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That active member dues come from their salary. Their salary come from a combination of their work and cooperate debt (which they are defaulting now). The burden or that debt and more hidden structural cost are upon tax payers now.

So, in essence their member dues come from tax payers.

They have wanted to get rid of these domestic UAW manned plants since day one, but could not find a way to do it without vaporizing the company in Bankruptcy Court.

Delphi is primarily a US headquartered, foreign company. What ever US production will (soon) be exclusively located in right to work states.

I’m making predictions: This (Delphi’s post BK business model) will be the future of the remnants of GM and ChryCo – after their second bankruptcy.

http://www.detnews.com/apps/pbcs.dll/article?AID=/20090210/AUTO01/902100349

As I understand it, GM isn’t buying back all of Delphi, but rather five or six plants it thinks are critical to GM operations. Is that correct?

How many Union votes will be left? Union guys are being walked out left and right and will be left unemployed and penniless within 2 years. They will be bitter.

Sure the union fed millions to the Dems… They got that money from active member dues. This is game over on that front.

Maybe the UAW can take a billion from the VEBA and give it to the Dems or something, but the cash flow from member’s dues and the hundred of thousands in votes is being crushed.

The UAW voting block is shrinking daily.

Wrong…
All this money buy Union Votes, not just UAW, for the next congressional and then presidential elections.

The UAW will be so small after this round of Ch. 11, that they won’t be much of a political force even in 2 years.

2 years ago GM had annual revenue of $180B…

4 times Q1 2009 revenue = $90B a year

Dropping the brands/dealers/plants in Ch. 11 will easily cut that in half to $45B.

GM won’t be big enough to even have a decent lobbyist in a few years.