Punishing UAW unfair and shortsighted

Just when you thought the latest round of corporate bungling was over, enter Delphi Corp., General Motors' largest supplier and former subsidiary.

Delphi, which filed for Chapter 11 bankruptcy protection last month, is asking a federal judge to void its current collective bargaining agreement with United Auto Workers and seeking a 60 percent cut in wages and benefits from employees. All this while Delphi is offering executives some $90 million in bonuses this year and proposing severance packages and stock options for key executives in order to "keep the team in place."

These same executives' maladroit management is responsible for the current state of affairs. In lieu of a favorable ruling by the court, Delphi recently offered the UAW a compensation package with average wages for production workers just slightly higher that the Federal Poverty Level. This request by Delphi comes on the heels of a revelation by the Pension Benefit Guaranty Corp., that creative yet lawful accounting techniques called "smoothing" at GM have hidden significant shortfalls in its pension fund, which is also responsible for part of Delphi employee's pensions.

There was a time not so long ago when employees with guaranteed pension plans in manufacturing towns like Buffalo believed they possessed just that, a guaranteed pension. They were under the misguided belief that employers contributed the required funds into the account each year as required. How wrong they were. Delphi recently reluctantly admitted it now suffers at least a $5 billion shortfall in its pension fund.

A day late and a dollar short, Congress has announced just this month that it is contemplating legislation that would force corporations and employers to fully fund their pension plans. Employers like GM and Ford with lower credit ratings would be given much shorter periods of time to fully fund their plans. Of course, the likely result will be fewer employers offering pensions. However this is of no consequence to employees at Delphi who may never receive the pension they were promised.

In prepared remarks recently, Delphi CEO Steve Miller laid blame for the situation at Delphi at the feet of its employees, you know, those men and women who actually produce the goods the company sells. Miller blamed labor and health costs saying in part: "curse of uncompetitive labor contracts" and "saddled with automakers' wages and benefits," which loosely translated mean: we have no idea what we did or what we're doing, we're going to ask the federal government to fix it, and we're going to cash out our executives, fill their stockings with options and hope for the best. Happy New Year, see you in the Hamptons!

Not one word was spoken of mismanagement, an inept business plan and exorbitant pay packages for executives.

Miller did cleverly sneak in the real cause of Delphi's bankruptcy between some other colorful bashing of employees: an inept automakers' falling market share, largely due to poorly designed vehicles, not labor costs, with which was placed virtually all of the business the company depended upon for survival, was the real cause of Delphi's collapse.

Punishing the UAW employees at Delphi for management's bungling and shortsightedness is in a word, wrong. The Federal Bankruptcy Court, along with Congress, must do everything in its power to assure Delphi employees receive every pension dollar promised them in their collective bargaining agreement. It was after all, a contract, a promise, a commitment that if they played fair and worked hard, they'd receive the benefits. The executives receive theirs. Henry Ford believed that by paying each employee sufficient wages to be able to purchase the products they manufactured, while limiting executive salary and streamlining operations to ensure profitability, the economy, society, and family would be the ultimate beneficiaries. Mr. Ford believed his company had a responsibility to more that the bottom-line.

Have we really evolved since then? Have we?

Ben Stormer is a UB alumnus. He is now an attorney and freelance writer in Los Angeles, Calif.