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Corporate Piracy Runs Amok
by Marie Cocco    Common Dreams
Entered into the database on Wednesday, October 19th, 2005 @ 10:10:52 MST


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Time was that when a big company demanded pay cuts of 60 percent from more than 30,000 workers in 13 states, announced numerous plant closings, and put employees on notice that pensions and health benefits were about to be slashed, some sort of political outcry would erupt.

That time has passed.

If there is official outrage over the bankruptcy strategy of Delphi Corp., the largest American auto-parts manufacturer, it is imperceptible. Yes, Michigan Gov. Jennifer Granholm, whose state would bear the heaviest burden, has said her piece. Yes, the business press has reported on the bankruptcy — laying out the usual story of an old-line manufacturer finding it so much cheaper to produce its wares overseas that it now has no choice but to force down wages here at home.

A few have seen fit to mention the exquisitely embroidered golden parachutes the company seeks to provide for 21 top executives who might, after all, downsize themselves out of their own jobs and so deserve a soft landing. Still, the commentary congeals predictably around the idea that this is all the fault of the United Auto Workers, a union that's been wildly successful at winning pay packages that allow its members to live a middle-class life.

"Unsustainable entitlement," one commentator called the UAW contracts. "Welfare," said another, as if heading for a factory before dawn to strap on safety goggles is the moral equivalent of a day spent dawdling in front of the TV.

For those who missed the brief news flash about this monumental bankruptcy, here's the outline: Delphi, once a subsidiary of General Motors but now independent, is losing money. The company complains of U.S. wages that are too high to compete with labor from Mexico, China and other offshore locales where it runs plants that do quite nicely, thank you. It is hell-bent on addressing its "legacy issues." That's corporate-speak for cutting pensions and health benefits for retirees.

Delphi wants to slash the wages of its American production workers from about $27 an hour to $10 or $12, and expects the UAW to go along quietly. Otherwise, the company will throw the workers on the mercy of the bankruptcy court. Delphi may well dump its pension obligations on the government. This could leave retirees with drastically reduced checks and taxpayers, ultimately, holding the bag.

To execute these tasks, Delphi says it needs the very best corporate managers. So it wants to sweeten their severance terms if they stay on for a while but then are let go involuntarily. The estimated cost is about $30.5 million.

And after the restructuring, Delphi needs managers to drive the sleek new corporate machine. So it seeks to create a separate cash-bonus plan for about 600 executives worldwide, under which they could receive payments of up to 250 percent of salary. President Rodney O'Neal is looking at a $2.7 million "cash opportunity," according to court documents filed earlier this month. Vice Chairman David Wohleen stands to gain $2.2 million. Chairman Steve Miller isn't included in this round. He got his upfront, with a $3 million signing bonus paid last July. In an apparent pang of conscience, Delphi announced Monday that Miller and a few other officers will take pay cuts while the bankruptcy is pending, and that it's holding back its beefed-up executive pay program until the court can rule on it.

A full-time production worker who agrees to Delphi's suggested $10 an hour wage would gross $20,800 a year, down from about $56,000.

Whether this makes you angry or sad or, perhaps, encouraged about the future prospects for Delphi stock, I do not know. It makes me wonder what this country wants to be in the 21st century.

In the 20th century, we built the most prosperous society ever. The accomplishment came through private striving and public policy. And behind the achievement was a shared belief in the good of paying workers enough to create a consumer class, and then raise children who would reach higher into the middle class.

If there is a shared philosophy now it seems to be that no corporate cost-cutting tactic is unacceptable. It calls expensive health coverage a symptom of workers' greediness at home — but conveniently, a government-funded expense abroad, one which allows Delphi and other global companies to produce more cheaply overseas. It is a philosophy that says a pension for average workers is an unaffordable excess, but extra pay for executives is a legitimate business strategy.

If this is our philosophy for this new century, the era will create the sort of economic caste system we boasted of having overcome in the last.