Delphi on course to dump pensions
Labor talks stalled; PBGC, GM would safeguard payments
indystar.com
By Ted Evanoff
ted.evanoff@indystar.com
November 18, 2005
Bankrupt auto-parts maker Delphi would shift pension obligations for nearly 34,000 workers and retirees to the Pension Benefit Guaranty Corp. under its latest wage offer to the United Auto Workers union.
Delphi, Indiana's No. 3 industrial employer, and its unions have been locked in a dispute over concessions since the company proposed a 61 percent wage cut in October for 24,000 workers, including 6,500 at Anderson and Kokomo.
After UAW leaders slammed the latest wage offer Wednesday, new details about that package emerged Thursday. A Delphi official, in an interview, confirmed the company is prepared to ask a bankruptcy court for permission to turn over the pension plan to federal authorities.
Even if Delphi drops the plan, regular payments to retirees are expected to continue at full levels. General Motors has guaranteed it would cover the portion of Delphi pensions not paid by the government if the supplier went bankrupt before 2007. GM spun off Delphi in 1999.
While the pensions appear secure, the issue of handing them to the government would put Delphi in the middle of the current pension reform controversy.
The Pension Benefit Guaranty Corp. was set up in the 1970s to take over responsibility for pensions from companies that go out of business. In recent years, PBGC became loaded with obligations as ailing steel mills and airlines entered bankruptcy. Those companies got court approval to shed pension costs and slim down into more profitable enterprises.
On Wednesday, the Senate passed a pension reform bill intended to make corporations take care of their pension plans. The bill, which now goes to the House, would require that corporations pour cash into underfunded pensions. PBGC estimates corporate pension funds carry a $450 billion deficit in total.
Delphi spokesman Lindsey Williams said the company is trying to stay in business by bringing its costs down to the average of major automotive suppliers in the United States.
Delphi inherited GM's wage scale, currently $27 an hour, when it was spun off by the automaker.
"Our focus is to be competitive in the United States with U.S. workers making competitive wages,'' Williams said. "This is not about closing plants or moving them overseas. We want them to be competitive in the United States.''
Delphi in October made no attempt to jettison pension plans as it sought concessions that would reduce production workers' wages to $9.50 to $10.50 an hour.
After UAW leaders rebuffed that plan, Delphi on Tuesday offered a new deal with higher base wages of $10 to $12.50 an hour and improved medical plans but pensions only for new hires. Under the Tuesday proposal, the current pension plan "would be dealt with through the bankruptcy process,'' Williams said.
UAW Vice President Richard Shoemaker rejected that offer Wednesday, saying it wouldn't be given to members for a vote.
The UAW represents 24,000 current Delphi employees and 9,593 retirees across the nation. Among the current employees are 13,979 workers eligible to retire now, according to a report by UAW Local 292 in Kokomo.
GM's pension promise to Delphi covers workers with at least 23 years of Delphi and GM service on the day Delphi terminates the pension plan. |
