There's plenty of blame to go around in Delphi bankruptcy

Friday, May 12, 2006
Daniel Howes

There's plenty of blame to go around in Delphi bankruptcy



There are those in this town who think that bankrupt Delphi Corp.'s bid to void its union contracts, now playing in a New York courtroom, is tantamount to doing God's work.

There are those around the country who see evil in the same thing -- evisceration of 70 years of contract gains, abuse of federal law and a naked attempt to screw the workers whose actions didn't have anything to do with landing Delphi in bankruptcy.

This is a Detroit dialogue of the deaf, which is why the most powerful tools in this titanic battle aren't what either side says. It's what they do (or did) and how it looks to the beholder.

So here, on the stand, we have the Troy-based supplier's folks arguing the need to drastically cut the hourly work force and sharply reduce the wages and bennies of those who remain even as they concede that Delphi plans to pay $60 million in bonuses this summer to 14,000 salaried employees.

It doesn't look right

Even if many of Delphi's salaried workers and most of its executives are underpaid compared with competitors (they are) and even if they have performed well through trying times (they have), the bad optics of cutting hourly jobs and granting salaried bonuses are devastating and practically impossible to defend.

Once again, we have Delphi brass giving its opponents a rhetorical club to beat them with. Nevermind that Delphi is losing lots of salaried talent, that it's performing better in bankruptcy than predicted, that insiders talk about lots of going-away parties and lots of people taking midweek vacation days (presumably to interview elsewhere).

Once again, Delphi's critics will wield the proffered weapon, blaming the bonus-takers for all that ails Delphi and conjuring mental images of yet another victory of the haves over the perennial have-nots.

Most of which is beside the point. This equal opportunity train wreck was inevitable as soon as former parent General Motors Corp. began slashing its production schedule and Delphi's directors tapped a post-career workout guy, Robert S. "Steve" Miller, to engineer a turnaround.

Playing the blame game

What the opposite sides in this bankruptcy have in common is the Detroit-based auto industry's most plentiful commodity -- that perennial bumper crop called blame and its plentiful fertilizer called envy.

Here's a sample:

Angry that salaried folks are in line for bonuses? Too bad, because no one's offering those about to lose their jobs $35,000 handshakes to slip into retirement or more to just go away.

Angry that the hourlies are in line for buyouts or buydowns? Too bad, because you wouldn't be outside looking in if you'd had the foresight to join a union and get the protection that comes with it.

There's plenty of blame to go around. Former GM execs who figured they could keep Delphi running, but couldn't. Former Delphi execs who couldn't outrun the cost curve even as they migrated business overseas. Union leaders who knew Delphi's labor rates and work rules weren't competitive with other union suppliers, but continued them anyway.

This is what they all created.

Daniel Howes' column runs Mondays, Wednesdays and Fridays. Reach him at dchowes@detnews.com or (313) 222-2106. Catch him Fridays with Paul W. Smith on NewsTalk 760-WJR.