Goodbye, Mr. Goodwrench

by NICHOLAS VON HOFFMAN

[posted online on October 14, 2005]

When Delphi, the nation's largest auto parts supplier, declared bankruptcy a couple of days ago, it was the end of a way of life for American automobile workers, the last large group from the smokestack era.

Until 1999 the company was a subdivision of General Motors. It was, in the lingo of business, spun off as a separate company in hopes it could pick up new customers as an independent entity. But with its high wages, medical benefits and retirement costs, Delphi was being killed by foreign competition. It lost $4.5 billion since 2000 and cannot pay its workers' salaries nor honor its pension obligations--a debt of billions the company does not have.

Money-losing companies are going into bankruptcy courts pleading with judges to break their union contracts before the union contracts break them. Delphi, which has 33,000 union employees, is paying its workers a wage and benefits package worth about $65 an hour. Now it wants to pay them about a third of that, a disaster for a family that has borrowed money for a house, cars and education. As one of Delphi's workers was quoted as saying, under such a new pay scale he would not be able to afford a GM car. Quite a note when you recall that in 1914 Henry Ford made the world come to a stop by announcing that, thanks to the system of "mass production" he had invented, he was raising his workers' pay up to $5 a day so they could buy Ford automobiles.