Another pension program for us to pay for.
Delphi bankruptcy hits GM
By Associated Press | October 11, 2005
DETROIT -- General Motors Corp. has been negotiating with the United Auto Workers for months in an attempt to lower its skyrocketing healthcare costs, but those talks could be jeopardized by Delphi Corp.'s bankruptcy, analysts said yesterday.
Uncertainty over GM's situation caused its shares to fall $2.81, or nearly 10 percent, to $25.48 on the New York Stock Exchange. Shares of auto supplier Delphi, which filed for bankruptcy on Saturday, fell 79 cents, or 70.5 percent, to 33 cents.
Standard & Poor's Ratings Services also lowered GM's credit rating one level deeper into ''junk" status yesterday, from BB to BB-, a move that could make it harder for the struggling automaker to borrow money. GM, which is Delphi's former parent and largest customer, will likely face price increases from Delphi and is at risk of disrupted supply if there is labor strife at Delphi plants, S&P said.
GM and the UAW have been talking since spring about ways to cut GM's annual healthcare bill, which will grow to $5.6 billion this year. GM has suggested, among other measures, that hourly workers should pay as much for their healthcare as salaried workers do. The UAW has said it will consider some ways to help GM but won't reopen its contract with the automaker, which is scheduled to expire in September 2007.
Some industry analysts said the UAW may be less willing to make concessions to GM because the automaker didn't prevent Delphi from declaring bankruptcy, putting the supplier's 24,000 UAW-represented hourly workers at risk of massive pay cuts.
GM spun off Delphi in 1999 but left it with high labor costs. The supplier is now expected to seek cuts in wages and healthcare.