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CEO
Says Delphi Can Save Pensions
By
Jason Roberson, Free Press Business
April 3, 2006
Delphi Corp. Chief Executive Steve Miller, who rattled the auto industry Friday with a sweeping restructuring plan to eliminate more than 23,000 workers, defended his actions but expressed a desire to protect pensions in a speech Monday before the Detroit Economic Club.
More than a hundred protesters, mostly hourly Delphi workers, chanted with picket signs outside The Masonic of Detroit on Temple Avenue.
Miller addressed widespread criticism of his Friday announcement to shed 25 of 33 U.S. plants, to seek elimination of union contracts and to get rid of retiree medical and life insurance benefits. The list of those disagreeing with Miller ranged from General Motors Corp. CEO Rick Wagoner to Gov. Jennifer Granholm.
“Despite the negative views expressed by some, we see the filings as a means to keep the process going,” Miller said. “Think of it more as an insurance policy, it’s something you need to have, but hope you’ll never use.”
"We intend to honor our accumulated pension obligations, thereby avoiding termination of our pension plan," Miller said in his speech. "We want to restore our under-funded plan out of future profits, but we will need time. This means we must find a way to stretch out our required pension plan payments.
"And it is essential that the restructured Delphi be a robust enterprise, indeed. Failure to achieve our goals could hurt our retirees and further burden our nation's pension safety net system. "
Sitting four tables away from the podium, Gregg Shotwell, the leader of an dissident faction of union workers and an hourly Delphi worker who is working to slow down production at Delphi’s plants, said Miller’s speech was insulting to workers concerned about their pensions.
“What struck me the most was he said he’s going to try to keep Delphi pensions solvent,” said Shotwell, who purchased a $35 ticket to hear Miller speak. “And I was struck that he would think that any of us would trust that.”
Delphi, GM, and the United Auto Workers, Delphi’s largest union, said pensions will stay intact. Those comments came as the three parties reached an attrition plan two weeks ago for 13,000 Delphi workers to receive $35,000 to retire early, or accept one of 5,000 positions at GM.
“In fact that was alarming, because if my pensions depended on Delphi I’d have no faith in it at all,” said Shotwell, 55, wearing a dark gray suit, far different from his work clothes as a machine operator at Delphi’s Coopersville plant. “We would prefer to have our money up front.”
The protesters outside said they are angry with Delphi’s Friday announcement to shed most of its 33 U.S. plants by January 2008 while cutting 23,000 workers — including 10,000 in Michigan. Plants in Flint, Adrian, Coopersville, Saginaw and Orion were on the hit list.
“Our families are going to suffer,” Jessie Garcia, a Delphi worker from Flint with 29 years seniority, said Monday while holding an American flag. “They’re kind of forcing us to accept the buyout.”
Beyond the U.S. hourly jobs Delphi plans to cut, it also targeted another 8,500 salaried jobs worldwide.
Delphi says it is burdened with:
- Restrictive labor contracts that require it to pay far more than its competitors. The company says its 33,100 hourly workers in the United States make $78.63 an hour, a new increased figure it disclosed for the first time Friday. Delphi says that average hourly wage includes benefits such as health care and vacation days and legacy costs, which include retirement health care costs and health care.
- A gradual loss of GM’s business. Delphi’s total revenue from GM fell from $22.3 billion in 1999 to $12.8 billion in 2005. GM’s market share also has slipped, which has meant less business for Delphi.
The Delphi content — or the dollar value of Delphi parts in a typical GM vehicle — has fallen from $3,200 in 1999 to $2,300 in 2005.From Oct. 8, when Delphi filed for bankruptcy, through Feb. 28, Delphi has lost $1.5 billion.
After his speech, Miller was asked whether the company was spending more time managing the company’s daily operations or on the bankruptcy process.
Miller responded that Delphi President Rodney O’Neal has taken over the day-to-day leadership of Delphi.
Miller said it will take until the first half of 2007 to sort through creditor claims. When that is done, Delphi will emerge from bankruptcy, Miller said.
“If we do this right, Delphi will remain one of the world’s premier global automotive suppliers with flexible and profitable operations in America,” Miller said while concluding his speech, just as he said at the end of a speech on Jan. 16 at the Automotive News World Congress. “If we do it badly, Delphi may be broken up into small pieces, and America will have lost some of its precious industrial treasures.”
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