Sample Essay

At the core of the bankruptcy issue at Delphi Corp is the major problem of high labor costs. High wages and the obligations for payment to many workers in Delphi Corp’s plants created a quagmire which left the company in a dilemma. The workers were represented by unions and their rights safeguarded. In the collective agreement between UAW and GM it was clear that GM would continue to pay wages to some of the workers.

Thus, overlooking these agreements in court as suggested by Delphi Corp in their litigation claims would result to void wage obligations. To an extent, Delphi Corp sought to improve the situation of their workers by bargaining for better benefits and pensions while filing for chapter 11. However, the welfare of most workers was at risk. Indeed, since Delphi Corp was experiencing great competition from other companies offering low wages to workers they recognized that it was only reasonable to cut back on the labor costs. However, their choice to file for chapter 11 only aggravated their situation while they could have come up with more amicable solutions through negotiations. When GM spun off Delphi, they sought to reduce manufacture costs and the same has resulted to the collapse of Delphi.

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