AFSCME 3357-HOF'S BLOG

Delphi Day of Destiny Delayed
Deadline to Reject Union Contracts is Sept. 18
For about the thousandth time,the bankruptcy court has granted Delphi Corp. an extension to the deadline to accept or reject its union contracts. Now the deadline is September 18th.

The extended deadline comes soon after Delphi's report that it lost $2.6 billion in the first half of this year. Of that amount, $1.9 billion was attributed to the cost of a buyout of senior unionized workers. More than 85% of those eligible to take the buyouts decided to cut bait & jump ship. Delphi estimates that its unionized workforce will be cut in half by the end of the year due to the buyouts. What's surprising to me is that Delphi's sales were strong, with a slight over-all improvement over last year.


Is General Motors the Next Mitsubishi?
Will 4 week promotion lead to $4 billion loss?

If there's one global automaker in worse trouble than General Motors, it's probably Mitsubishi. The banking system in Japan makes it harder for a company to fail, and Mitsubishi can that its good graces that that's true, because if it were a U.S. corporation, Mitsubishi would no longer be a going concern. Mitsubishi's biggest problems concerned sales that were artificially inflated by easy credit practices at Mitsubishi dealerships. By lending money to customers with poor track records, Mitsubishi set itself up for an extraordinary percentage of defaulted loans, repossessed cars and tumbling resale values.

Recent allegations point to a lessoning of credit standards for GMAC loans. I've seen reports on this from Robert Farago's thetruthaboutcars.com, and in a Businessweek editorial by a former dealership credit manager named Ed Wallace. According to Wallace, in this summer's 0% interest promotion, GM offered buyers with A-E credit scores 0% interest for 72 months. According to Farago, the expected defaults from these loans were obscured by creative bookkeeping, but by taking on these bad risks, General Motors could end up taking a $4 billion hit to GM's bottom line.