And this Delphi mess is just going to get worse, as the Wall Street Journal article below reports (subscription required so I’ve given you a snippet). I know I have a particular interest in this as a UAW member. But, this is yet another example of (a) the insanity of the lack of a national health insurance plan–which, as I’ve been ranting about for many, many months, has to be taken on not just as a moral issue but as a competitive issue for every company in the country–and (b) how workers lose their pensions thanks to company’s using the bankruptcy law…though the Delphi CEO makes a very not-credible claim that the pension plan will not be jettisoned, particularly since, as I pointed out last month, this guy bases his whole business strategy on buying up ailing companies and dumping their pension funds to help the balance sheet.
Delphi CEO Sees Major
Downsizing in Bankruptcy
Company
Hasn’t Decided
On Federal Pension Bailout;
GM Faces Financial Risks
By JEFFREY MCCRACKEN and JOHN D. STOLL
Staff Reporters of THE WALL STREET JOURNAL
October 10, 2005;
Page A1
DETROIT — Delphi Corp., the big auto-parts supplier that filed for Chapter 11 bankruptcy protection on Saturday, plans to shut down or sell off a substantial part of its U.S. operations, but is not yet sure if it will ask the federal government to take over its pension obligations, its chief executive said in an interview.
“We have not decided what we will do,” with the Delphi pension plan, said Chairman and CEO Robert S. “Steve” Miller. “We want to try and create a company that accommodates our retirees without having [the pension plan] terminated and turned over” to the government’s Pension Benefit Guaranty Corp., he said. The company plan is underfunded by as much as $4.3 billion.
The filing in bankruptcy court in New York by Delphi, the largest U.S. auto supplier, is the clearest sign yet that the U.S. auto industry — and its unionized workers — are moving toward the sort of slash-and-burn restructuring that was forced on airline and steel workers by major bankruptcies in those industries.
Besides potential disruptions in auto supplies to manufacturers, the filing could force major concessions on Detroit’s largest union, the United Auto Workers, while loading additional costs onto already-strapped auto makers. Especially vulnerable is General Motors Corp., the former parent of Delphi, which guaranteed the pensions and benefits of some Delphi hourly workers when it spun the company off in 1999.
Mr. Miller, a 63-year-old turnaround specialist, led Bethlehem Steel Corp. through bankruptcy and handed that company’s pension plan to the PBGC. The filing Saturday came after Mr. Miller failed to negotiate a multibillion-dollar bailout plan with GM, Delphi’s largest customer, and major wage-and-benefit concessions from the UAW.
In the interview, Mr. Miller said Delphi’s troubles will require the company to divest, consolidate or close “a substantial segment” of its 45 manufacturing sites in the U.S. and Canada, which employ 49,000 workers. He said he also plans to renegotiate the contracts and retirement plans of Delphi’s 33,000 union workers and 12,000 retirees.
The filing left plenty of questions unanswered. Delphi, of Troy, Mich., did not detail which or how many U.S. plants it hopes to get rid of. The company previously identified 11 U.S. plants that were unprofitable and could be closed or sold.
In addition, Delphi said it would seek in court to terminate health and life-insurance benefits for its retirees in mid-December. But one question to be answered in court is how much of that GM could be forced to pick back up.
