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
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.