UAW Keeps Pressure on as Delphi Proceeds in Bankruptcy Court

Washington DC November 23, 2005; The AIADA newsletter reported that veteran turnaround expert Robert S. “Steve” Miller, who tookover as head of Delphi in July, faces an uphill battle as he tries to get the nation’s largest supplier firm out of the biggest pickle it has ever faced.

Holding nothing back, Miller is on hot pursuit to change the tone of things in Motown, making blunt statements regarding the situation his company faces and proposing extreme demands to nurse the bankrupt company back to financial health. “

Next month, Delphi is expected to ask a federal bankruptcy judge for permission to terminate contracts paying $64 an hour in wages and benefits combined, so that it can impose sharply lower rates,” reports The New York Times.

And that’s not all. "It is very difficult to be the bearer of bad news, said Miller. But the only way to find the answers is to first understand the problem." According to The Times, “One answer could come through the bankruptcy process. If there is no agreement with unions by Dec. 16 - and Mr. Gettlelfinger said last week that one was unlikely by then - Delphi will file a motion in bankruptcy court to set aside its union contracts.” Setting the stage for a November 29 court hearing in New York, the United Auto Workers union yesterday filed an objection to Delphi’s U.S. Bankruptcy Court proposal to reward its top executives with cash bonuses and stock potentially worth more than $500 million, according to The Detroit News. “In its filing, the UAW called Delphi’s executive compensation program "grossly excessive" and said it would impede the union from reaching agreement with the bankrupt auto supplier on wage and job cuts for hourly workers.”

UAW members, who number 24,000 at Delphi, face wage cuts from $26 an hour to $12.50. Meanwhile, Delphi has argued that the bonuses and stock awards are “key” to retaining its valuable executives during bankruptcy, and it will "boost employee morale" among its top management at a time when it is needed most. During a recent interview with The News, Miller adamantly backed the proposal. "I cannot afford to lose this group of executives. They need to be appropriately incentivized to stay," he said.

"The problem is that I am paying hourly workers triple what our competitors pay. I am paying the executive group less than what other companies pay." Miller maintains that the union’s objection is merely an attempt to “distract attention" from Delphi’s high labor costs.