Monday, May 22, 2006

Delphi Too Broke to Pay Workers—But Execs Get $98 Million in Bonuses

Delphi Too Broke to Pay Workers—But Execs Get $98 Million in Bonuses

Top bosses at Delphi Corp. claim the company is so broke it can’t afford to pay a fair wage to union workers who make the company successful—but it does have enough money to give management $98 million in bonuses this year.

Kevin Butler, Delphi’s vice president for human relations, told a federal bankruptcy judge May 10 the bonuses likely will go to managers and salaried workers because the company is exceeding its financial projections.

Under a long-standing Delphi bonus plan, 450 Delphi executives are expected to split $38 million, which works out to an average $84,444 each. Some 14,000 salaried employees would share $60 million, or an average of $4,286 per worker. Delphi’s last offer to its 33,000 hourly employees would cut their wages from $28 an hour to $16.50 an hour by September 2007.

“It’s grossly unfair to be increasing the compensation of salaried and management while making this drastic attempt to cut the pay of hourly workers,” says Thomas Kennedy, an attorney for IUE-CWA. IUE-CWA and the UAW represent some 33,000 Delphi workers.

The news of the bonuses reinforces the fact that the nation’s largest auto parts supplier is using the bankruptcy process to impose deep wage and benefit cuts the workers had already rejected during contract talks, union leaders say. Like many other companies in recent months, Delphi declared bankruptcy to renege on its collective bargaining contracts and to cut costs by squeezing pay and pensions.

The Detroit News “Autos Insider” columnist Daniel Howes puts it this way:

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.

Although Delphi executives claim the cuts are necessary to remain competitive, they refuse to give union leaders the financial records that would prove their argument. Fifty-five members of the House and 25 senators recently wrote to Delphi CEO Robert “Steve” Miller, asking him to provide complete and current financial information to workers, retirees and communities and to explain why the company’s proposed wage and benefit cuts are necessary.

Delphi filed for bankruptcy in October and immediately began calling for concessions but failed to reach an agreement with the unions. The company’s last offer in late March also included a $50,000 bonus for accepting the concessions—if Delphi’s former owner, General Motors Corp. (GM), agrees to put up the money for the bonuses. As of yet, GM had not agreed to do that, union lawyers say.

The IUE-CWA members have given their leaders authorization to call a strike if necessary, and UAW members are voting on authorization. A strike could shut down Delphi and impact production at GM, Delphi’s largest customer.

Meanwhile, Delphi continues to show its anti-union stripes. The company is advertising for replacement workers across the country to work for $10-$14 per hour, half of what union workers make, in the event of a strike.

by James Parks


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