Delphi parts destroys pensions, cuts wages

On July 31 Judge Robert Drain of the U.S. Bankruptcy Court in New York approved a plan for Delphi to emerge from bankruptcy by the end of August. Delphi is the former parts division of General Motors that was spun off as a separate entity in 1999. The judge’s ruling comes nearly four years after Delphi introduced the pattern of contract busting through bankruptcy to the auto industry.

Delphi sought protection from creditors under a Chapter 11 bankruptcy filing on Oct. 8, 2005. CEO Robert “Steve” Miller quickly earned the enmity of union workers by demanding they agree to a 65-percent pay cut and by gutting their entire contract; over 20 plants were to be closed. All Miller wanted untouched was the no-strike pledge and the management’s right clause.

Needless to say, the workers voted no on Miller’s initial proposals. Rank-and-file resistance emerged, choosing the name Soldiers of Solidarity. SOS held meetings and demonstrations and waged an in-plant “work-to-rule” slowdown campaign.

However, Delphi—in collusion with GM— was leading the push to drive down wages and eliminate jobs in the auto industry, particularly the parts sector. “We’re just the warm-up act,” Miller stated on several occasions. (Detroit News, July 31)

Unfortunately, the leadership of the United Auto Workers then negotiated a plan for Delphi to offer lump-sum buyout payments to entice workers to quit or retire, with GM providing the financing. In 2004 the UAW had already reopened the 2003-2007 contract and agreed to let Delphi pay new hires half of what hourly production workers were then earning.

By the summer of 2007, with the workforce reduced from 50,000 to 17,000 in less than two years, the majority of Delphi’s unionized workers were making the bottom-tier wage of $14 an hour. This divide-and-conquer tactic led to easy passage of a contract that gave the newer workers a raise but cut the wages of higher seniority workers by $10 an hour.

The stage was set for Chrysler, Ford and GM—the “headliners” for which Delphi had been the “warm-up act”—to squeeze major contract concessions from UAW members later in 2007. This year Chrysler and GM, like Delphi, used Chapter 11 bankruptcy to their advantage. Fearing for their jobs, workers gave up raises, bonuses, overtime pay, relief time and even the right to strike for the next six years.

The bosses at GM still needed to complete the reorganization at what remained of Delphi. Not much was left; all but nine plants had been shuttered. A plan for GM to take back four U.S. components plants and the steering division, with the Wall Street firm Platinum Equity buying Delphi’s four remaining plants, was rejected by Delphi’s creditors. Now Judge Drain has approved GM’s acquisition of the five plants it wants back, but the rest of the business will go to Elliott Management, Silver Point Capital, Monarch Alternative Capital and other hedge funds in exchange for the $3.5 billion Delphi owes them.

Workers sacrificed on altar of profit

What is significant from a working-class standpoint, however, is not whether this or that private investor assumes Delphi’s shrunken assets. After the Platinum sale was dropped, Judge Drain overruled objections from retirees and allowed Delphi to dump its pension obligations onto the government’s Pension Benefit Guarantee Corp. This means that retirees, especially those who retired young after 30 years of service, will have their monthly Delphi pension check drastically reduced and will lose health and life insurance benefits altogether.

GM is, at least for now, bound by an agreement with the UAW to make up the difference between what its retirees were collecting from Delphi and what the PBGC pays. Other retirees—not only non-union salaried retirees but members of the Electrical Workers, Communication Workers and other unions—will get no assistance from GM.

What is GM getting out of all this? GM will have two new, wholly owned subsidiaries. GM Components Holdings LLC will include Delphi Thermal Systems in Lockport, N.Y.; Delphi Powertrain in Rochester, N.Y.; Delphi Powertrain Systems in Grand Rapids, Mich.; and Delphi Electronics and Safety in Kokomo, Ind.

GM Global Steering Holdings LLC will be comprised of Delphi Steering in Saginaw, Mich., the global headquarters and manufacturing operations for steering products, along with engineering and locations in Mexico, Brazil, Europe, India, China and Australia. Delphi Steering has more than 60 customers worldwide, including Renault, Volkswagen, Ford, Fiat, Hyundai Mahindra, Tata and almost a dozen Chinese vehicle manufacturers.

GM is in the process of reducing its U.S. workforce by 20,000 through more buyouts and by closing 14 plants. The sudden plunge in vehicle sales, however, has meant that GM is not hiring, and therefore not benefiting from the low entry-level wage of $14 an hour the UAW agreed to in 2007. But as Delphi workers become GM employees—some for the second time—they will be bound by the Delphi contract. Thus GM will gain 7,000 new, lower-paid workers.

What are the hedge funds getting for $3.5 billion? A lot more than four U.S. plants. These vulture capitalists will acquire Delphi’s overseas operations, consisting of around 140 facilities employing 104,000 workers around the world.

This is not the final chapter in the brutal auto restructuring in which workers and retirees are being sacrificed on the altar of profitability. Visteon, which Ford spun off around the same time that GM spun off Delphi, filed for bankruptcy May 28, and has asked the court for permission to eliminate health and life insurance for all its 4,480 retirees.

In January 2006, as the Delphi scenario was beginning and United Airlines bankruptcy was ending with the union pension plan gutted, the New York Times ran a story titled “Gee, Bankruptcy Never Looked So Good.” For autoworkers of this writer’s generation, capitalism has never looked so bad. Now is the time to be part of a global workers’ movement that is telling the bosses: “Don’t solve your crisis on our backs.”

Martha Grevatt has worked at the Chrysler stamping plant in Twinsburg, Ohio, for 22 years and is an active member of UAW Local 122. E-mail [email protected].