Auto Company To Use Bankruptcy To Slash Wages from $26 to $10
When Delphi Corporation filed Chapter 11 on October 8, the world’s second-largest auto parts maker was crystal clear about its goals. CEO Steve Miller said he needed to cut wages by 63 percent, from about $26 to $10 or $12, and to get workers to pay 27 percent of their health care.
Miller said he would ask the bankruptcy judge to void Delphi’s contract with the United Auto Workers if the union didn’t voluntarily agree to concessions.
The company would also close scores of plants, but the result would be a “golden opportunity to finally reshape [the U.S. auto industry],” as one Detroit columnist put it.
If the union protested by striking, Miller said, he would void workers’ pensions and turn them over to the federal government’s pension back-up agency, which would slash those too.
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Delphi, which until 1999 was GM’s parts-making division, has 33,000 UAW and other union workers in the U.S. and 12,000 union retirees. IUE-CWA represents 8,000 of those workers. Worldwide, Delphi employs 185,000.
On October 12, Miller—a nomadic CEO who specializes in “saving” companies through bankruptcy—went further. He predicted (in fact, advocated) that GM would declare Chapter 11 too if it wasn’t able to extract big concessions from the UAW. Miller almost seemed to be offering his services for that job.
Five days later, it appeared that Miller’s talents might not be necessary at GM. The company announced that union leaders had agreed to $3 billion a year in health care cuts for active workers and retirees.
CEO “Skip” Wagoner thanked UAW leaders for their “positive, cooperative, problem-solving spirit.”
