Auto parts industry

The continuing story of the wholesale reorganization of the US-based auto parts industry is worth another look this month.

GM is trying to get a divorce decree from its parts supplier, Delphi, but the alimony figures keep going up.

Indeed, the "ex" has started a familiar cry, "I'm melting, I'm melting!" The reorganization in the Manhattan bankruptcy court seems to be turning by decrees into a liquidation.

On December 31, Delphi reported to the court that it has discontinued its steering business, "Previously recognized impairment charges recorded with respect to these businesses are included in the loss from discontinued operations during 2007."

In January, the court approved Delphi's plan, which would have had the remainder of the company emerge from bankruptcy next month, but the credit crunch and some balking on the part of GM as to the role it would have to play in that emergence have held things up.

Accordingly on Monday, February 25, the court took another step in the ad hoc liquidation. It authorized Delphi to sell the assets of its recently discontinued steering business to an outfit called Platinum Equity.

Other auto parts companies have passed through the creaky revolving door of chapter 11 recently -- Federal-Mogul emerged in December, Tower Automotive last summer -- but Delphi likely isn't too lonely -- Dana Corp is there to keep it company for the nonce.

A lot might be said about all this. The usual take is that its all so much fall-out from labor/management disputes. If you're symapthetic to the unions, you say the managements have used the bankruptcy courts to reverse the hard fought gains of working folk, and so forth. If you're skeptical about the social value of unionism in its current form, though, you might prefer this account by blogger David Welch..

Don't expect resolution here. I'll see you all at Pragmatism Refreshed through the weekend.

Beware cries of "crisis"!

It wasn't that long ago (two and a half years, to be precise) that one could encounter anguished talk about the "asbestos liability crisis" devastating U.S. based corporations, and the need for a "global settlement" to be developed in committee rooms on Capitol Hill.

The legislative efforts failed, the Fairness in Asbestos Resolution Act has disappeared, and the unmanaged crisis seems rather to have fizzled away.

One of the corporations that had been most exposed to tort liability of "crisis" proportions was auto parts supplier Federal-Mogul, of Southfield, Michigan. F-M entered bankruptcy court protection in 2001 in an effort to resolve its asbestos liabilities. It was a long haul but the company emerged out from under the court's protection two weeks ago, December 27.

The company was exposed to the mass tort claims mostly by inheritance, via certain acquisitions it had made over the years. It also had some operational exposure. Between 1965 and 1981 Federal-Mogul had operated a division called Vellumoid, which had sold a gasket cut from asbestos-containing sheet material. Plaintiffs alleged they had been exposed to the asbestos while removing the gaskets in the process of repairing automobiles.

I don't know the particulars of how these claims have been resolved, but they must have been resolved somehow -- the asbestos claimants committee agreed to the reorganization plan in November.

Complex and protracted litigation isn't by itself a crisis. It is a byproduct of a complex world and the co-existence of a lot of contending interests.

My own guess would be that all the affected interests have been better served by the failure of the Congressional settlement than they would have been by its success.

And yes, I said yesterday that I planned to write something about the proxy fight at CNET today. But, hey, plans change. We'll get to CNET next week. See ya Sunday.