Delphi corp. and the corruption of bankruptcy

Thursday, April 13, 2006 at 04:19 PM

For those interested in the underlying details of the Delphi bankruptcy, and the many other automotive industry bankruptcies in process or to come, check out this in Business Week.

Delphi's (DPHIQ ) battle with the United Auto Workers has all the earmarks of a conventional labor showdown...But what's different in this battle is that Miller [Delphi's CEO] wants to use the bankruptcy courts to drastically slash Delphi's U.S. presence, thus freeing it up to focus on its already vast overseas production.  Miller filed for Chapter 11 protection only for his U.S. operations, which employ 32,000 UAW and other union workers. He was careful to exclude Delphi's 115,000-worker foreign factories, many of which operate in low-wage countries such as Mexico and China.

If Miller gets his way, court filings show, Delphi will end up with a U.S. workforce of perhaps 7,000, leaving the bulk of its production abroad.
Miller's is an unorthodox approach that paves a new road for U.S. employers striving to compete in a globalizing economy. After all, U.S. bankruptcy laws were written before globalization and intended to give companies a chance to reorganize and start over -- not flee overseas, says Sean McAlinden, chief economist with the Center for Automotive Research.

He says other auto parts companies, a handful of which already are in bankruptcy, are likely to follow suit if Miller's strategy succeeds. That means the $170 billion annual auto parts business could shift overseas even faster, jeopardizing more of the industry's 695,000 jobs.

Critics are trying to throw up all the roadblocks they can. On Apr. 6, two UAW allies, Senator Evan Bayh (D-Ind.) and Representative John Conyers Jr. (D-Mich.), introduced legislation in Congress to tighten up the bankruptcy laws in response to Delphi's moves. The bills would require the courts to factor in a bankrupt company's overseas operations when determining whether it can abrogate union contracts and retiree health-care plans in the U.S.

"Some international corporations that are struggling domestically use their losses at home to justify breaking contracts with American workers while their overall company is still thriving," the two lawmakers proclaimed in their joint announcement of the legislation.

So.  Use the U.S.'s business-favorable bankruptcy laws to ditch the U.S. labor force.  Let another U.S. corporation "scurry 'cross the water" (or land border) into the arms of another, now more desirable nation-suitor.  Do it by misrepresenting the state of your overall business and focusing on the small part of the business that supports your public claims of POVERTY.  The new song? "ALAS, ALAS, WE'VE NO CHOICE BUT TO fire your ass."

Not quite at the level of giving an American company tax breaks to move its plant overseas, but close enough that it should boil your blood.

Especially in light of the draconian watering down of individual bankruptcy protections in last year's bankruptcy laws.

Example 5,338 of your government, working for you, under laws passed by your legislators, working for you.  And it's becoming increasingly clear that you better have people working for you if you want to stay in America, since it's getting really hard to find someone else to work for.