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The Debacle of Delphi

The industrial welfare state forces the auto-parts giant into bankruptcy.

12:00 AM, Oct 21, 2005 • By RICHARD BURR
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And UAW leaders say they aren't ruling out a strike if the bankruptcy court nullifies its Delphi contract. That would shut down an important part of the national economy, since automakers rely on daily parts shipments to make vehicles. Delphi's Miller says a strike would escalate the number of plant closings and job cuts. But a walkout would cost GM business and pressure it to cave--a course the company has traditionally chosen.

A strike would also create a public spectacle which could pressure the Bush administration and Congress to step in with a bailout. Don't be surprised if Michigan's governor and Democratic congressional delegation propose a federal worker-focused package of subsidy and trade protectionism. They put together a similar wish list two years ago when "offshoring" or the outsourcing of jobs to foreign countries became popular.

And they may have a powerful ally in Sen. Hillary Clinton, who has a Delphi plant in New York. Clinton called Miller last week to chat about the factory, as well as pension and healthcare issues.

ANY BAILOUT SUBSIDIES of workers or companies should be a tough sell. Delphi isn't a saint. The federal government has found accounting misconduct in the company and a criminal investigation is ongoing.

Besides, the automakers and their workers made their welfare pact and now need to wean themselves from it. Congress is besieged with spending requests for Hurricanes Katrina and Rita. The Pension Benefit Guaranty Corporation is $23 billion in the hole and growing. Domestic automakers would love to have taxpayers subsidize their healthcare costs, but Americans may begrudge financing gold-plated benefits that many don't have themselves.

The UAW and mismanagement have already bankrupted one company. The industrial welfare state shouldn't drag Uncle Sam down with it.

Richard Burr is the associate editor of the Detroit News editorial page.