To Delphi Corporation's Robert Miller, "Bankruptcy Is A Growth Industry in America"!
by Gregg Shotwell
An insider's analysis of what Corporate Bankruptcy Czar Robert Miller is cooking up for workers and communities in America by Delphi worker/UAW activist Gregg Shotwell, with an introduction by former UAW Executive Board Member, Jerry Tucker
Gregg Shotwell is a machine operator for Delphi (formerly GM) -- the world's largest auto parts supplier. He has worked at its Coopersville, Michigan plant for 27 years. He's also an intelligent, caring, and prolific writer and wry analyst of the world of work around him. He has for many years produced a regular critique of that world called "Live Bait & Ammo" (online at www.solidiersofsolidarity.com). Thousands of auto and other workers read and respect Gregg and his LB&A postings.
The crisis surrounding the Delphi Corporation's attempts to radically restructure its U.S. Division at the expense of its workers and the communities that have supported it for many years has thrust Gregg Shotwell and many of his courageous Delphi co-workers into a new resistance movement called the "Soldiers of Solidarity" (SOS).
Robert Miller is the current CEO of Delphi Corporation. His mission is the radical restructuring of that company. His approach has been described as that of a "vulture capitalist" and evidence for that claim can be found among the wreckage of his previous corporate clients, including Bethlehem Steel. On Monday, April 3, 2006, Miller addressed the Detroit Economic Club and glibly laid out his rationale for the Delphi bankruptcy and its catastrophic aftermath.
Gregg Shotwell attended Miller's DEC Luncheon presentation and posted, in a 3-part series for Live Bait & Ammo, his analysis of what the "Miller Doctrine" will mean to workers and communities well beyond the ranks of Delphi workers. His analysis also reflects how the years of union collaboration and "jointness" with the auto industry have left the once powerful UAW incapable of launching a militant resistance to the most crippling attack on its members since its founding days in the late 1930s.
For some corporate cheerleaders, "Millerism" is capitalism's new frontier. For many other Americans, his cynical misuse of the Delphi Corporation and the decimation of its domestic workforce is a harbinger of an acceleration of the downward spiral intended for many more millions of U. S. workers. Our U.S. labor movement, with its "an-injury-to-one-isn't-necessarily-an-injury-to-me" philosophy, has slept through a number of "wake-up calls" over the years, but what the Delphi/Miller assault represents is a bell tolling for all. We all owe the Delphi workers, Gregg Shotwell, and the Soldiers of Solidarity our full support! -- Jerry Tucker
To Delphi Corporation's Robert Miller, "Bankruptcy Is a Growth Industry in America"!
by Gregg Shotwell
I dressed in corporate drag: a dark gray suit and tie, black wing tips spit shined, and a gold watch I bought on the street on my way to do business in the Temple. The watch didn't work but it sparkled, and appearance means more than substance when one is trying to pass inspection. I was about to hear Steve Miller give a speech to the Detroit Economic Club, and for a soldier of solidarity, it felt like an out-of-body experience. There wasn't a trace of grease under my fingernails. All the bills in my wallet were laundered.
I was surprised by the light security. I coulda-shoulda stuffed my pockets with paint balls. I walked in unimpeded and took my seat at table number 49. I introduced myself to the assembled guests: management types in "communications" at Metaldyne; a couple thick skulls from GM Powertrain; and an investor whose suit cost more than my car.
I ate lasagna, salad, bread, and tiramisu. I felt warm and sleepy. The voices around me were soft. The ambiance was distinctly devoid of emotion or nuance. This must be what rich people (or Ron Gettelfinger for that matter) feel like all the time -- amnesiac. I forgot about my comrades outside with picket signs. The wind hammered their faces with hard rain, but I didn't feel any pain, just a vague misgiving. I could see Miller. I estimated the distance as a peg from third base to first. I could have beaned him with a paint ball. Mentally I approached the dais, leaped over the table, and strangled him with my bare hands. I imagined murdering the remaining corporati with kitchen utensils while women screamed in the background and their men fainted.
Then we pledged allegiance and prayed to Mammon.
Miller began his discourse with a spate of jokes intended to appear off the cuff. His imitation of self-deprecating humor and spontaneity reminded me of diagramming sentences with Sister Mary Gertrude. No one got it. He was playing for the crowd, but the hard edge of skepticism in Detroit is serrated like an old bucksaw. His punch lines couldn't bridge the kerf.
How does the old saw go? Those who can manage a business do. Those who can't file bankruptcy. Gauging reactions of the crowd led me to believe the media hasn't tapped into Miller's noxious effect on investors, engineers, community leaders, and people who in one capacity or another are experienced in manufacturing. The victim of megalomania doesn't suffer -- everyone around him does. The power of self delusion is inestimable. When Miller looks in the mirror, he sees a full head of hair, not a boiled potato.
The media portrays Miller as a straight shooter. Someone who tells it like it is and lets the proverbial chips fall where they may. I don't believe I was the only one in the room who heard the contradictions, false analogies, and damn lies. For example, he said the steel industry under his direction "endured a painful restructuring, but has been restored to health."
95,000 retired steel workers deprived of pensions and health care have not been "restored to health." In regard to the retired steelworkers, Miller expressed disappointment. He said, "That dog won't hunt" (qtd. in Mark Reutter, Making Steel).
Miller claimed he sleeps well at night because he knows he is doing the right thing. The self-righteous declaration was, I believe, his only sincere comment. He spoke from the heart. He truly believes he is doing the right thing -- for himself. Steve's World is a very small place. He does not see the damage left in his wake: the suicides, the broken families, the foreclosures. If it is good for Steve Miller, then, "It is right and should be so" (in The World according to Steve by Steve Miller)
In Steve's World, "All of Bethlehem steel mills are operating profitably with modern productive labor agreements. They are part of the Mittal group."
In "Suits Gone Wild" (September 2005), an online update onMaking Steel, author Mark Reutter cites an Associated Press report from August 2005: "Steelmakers are warning their shareholders and the investment community that results in the third quarter of this year are going to reflect a much weaker landscape. . . . Just 23 blast furnaces were operating in the US at one point this summer, the fewest since a nationwide steelworkers' strike in 1959."
Reutter cites a Wall Street Journal report that "the emergence of London's Mittal family as a significant force in in the U.S. steel market will diminish the bargaining power [of Ford and General Motors] and put further pressure on their efforts to control costs" ("Who Is the Man Who Bought Sparrows Point?" September 2005).
Miller sold Bethlehem Steel to Wilbur Ross who made $1.185 billion off the bankrupt company and passed it on to Mittal for further exploitation. Mittal is praised by the business press for breaking contracts, sacking workers, and driving wages down. Currently, Miller's fellow vulture capitalist, Wilbur Ross, is buying up auto suppliers.
Pain and Suffering Don't Exist in Steve's World
Miller warned at the end of his speech: "I fear something like intergenerational warfare, as young people increasingly resent having their wages reduced and taxed away to support social programs for their grandparents' income and health care concerns." It was one point on which Steve and I may find agreement -- two-tier wages are socially degenerate.
Miller's fear of "intergenerational warfare" did not prevent him from asserting that he wanted to "restore our underfunded pension plan out of future profits," which by his design is based on cutting wages for new hires -- workers, I may add, who will not have a vested interest in a defined pension for their elders since they won't have one themselves. The "intergenerational warfare" Miller foresees is not so much a fear as it is a plan. Miller won't have to bust the union because the union will self-destruct if it adopts two-tier as a solution.
Miller contends it is vital that Delphi sustain employees' motivation. Apparently, he doesn't get around much outside the tight circle of Steve's World. He hasn't seen the stunned and despondent faces of both hourly and salary workers. He admits there has been a "brain drain," an exodus of talent from the executive staff. He recognizes that Delphi needs to compensate people for their skills, knowledge, and experience. But he is unaware or minimizes the value of skills, knowledge, and experience on the shop floor. In Steve's World, "human capital" is a quantity to extort and debase, not a quality to revere and nurture.
In conclusion, Miller declared, "If we do this right, Delphi will remain one of the world's premier global automotive suppliers. . . . If we do it badly, Delphi may be broken up into small pieces, and America will have lost some of its precious industrial treasures."
Does he intend to "do it badly"? On March 31, Miller revealed his restructuring plan. Twenty-one of twenty-nine plants will be closed, sold, or consolidated. Is that not "broken up into small pieces"?
The auto industry could not absorb the closure of twenty-one Delphi plants in the next year. We should bear in mind that just because the straight shooter says something doesn't mean he means it. Originally, he said he did not intend to file for bankruptcy. He set three deadlines which he backed down from. He set wages for Delphi workers at $9.50, $12.50, and most recently at $16.50. Dealing with Miller isn't like buying a Saturn. Every time you visit the show room at Steve's World, you get a different deal.
Contradictions, false analogies, and damn lies are Miller's stock and trade. The steel industry is healthy; pitting the young against the old will restore the underfunded pension; all skill, knowledge, and valuable experience is clustered in the office; and the sale or closure of 75% of Delphi's U.S. operations does not mean Delphi "will be broken up into small pieces."
Miller insisted that the press only writes about the people who are angry at him. We don't hear about the people who are excited about Steve's World and his vision for the future. We don't hear about the people who want to make sacrifices for Steve's World. No, we just read about "those people" across the street who think that the Delphi bankruptcy is a fraud.
Yes, he had to acknowledge the soldiers of solidarity. He said we have a right to speak out, which is more generous than some of our local union leaders. He said his favorite picket sign was Miller Isn't Worth a Buck. "It must have been a typo," he quipped. It was a proud moment for me. I made that sign. My coworker, Juanita Cadman, has carried it in three protests in three cities. The concept came from another coworker who prefers to remain anonymous as do many in the dedicated ranks of the underground resistance. But he knows who he is and that his message got through to Miller and the Detroit Economic Club, too. Miller Isn't Worth a Buck.
In Steve's World, "Restructuring" Is Just Another Word for "Vulture Capitalism!"
At the Detroit Economic Club, Miller said that bankruptcy "is a growth industry in America." It's ironic that Miller thought the audience in Detroit would find his smugness amusing. I heard teeth grinding like a tranny that popped a drain plug.
He claimed the typical bankruptcy costs "about $100 million a year in professional fees." He did not include the social costs, i.e., the losses to workers, investors, and taxpayers.
If we provide enough carcasses, the vultures will flourish, and the restructuring of America -- lost jobs, lower wages, higher health care costs, and defunct pensions -- will create new opportunities for bankruptcy, the premier "growth industry in America."
Welcome to Steve's World where wealth is created not by labor in mining, agriculture, and manufacture, but by lawyers -- which leads to the next question: fraud.
"I would just remind everyone that as embarrassing as that was to all concerned, the changes" -- the euphemism "accounting restatements" is roughly equivalent to "I didn't steal it, I borrowed it" -- "had nothing to do with Delphi's cash rebalances or operating issues. Even with flawless accounting, we'd be exactly where we are today." Miller delivered this bold-faced lie with all the aplomb of a man telling children they were delivered by storks.
Had investors known the truth, they would not "be exactly where they are today." Had workers known in advance that Delphi would sell parts to GM below cost, they would have raised a hue and cry and struck before GM could spin the scheme to jettison Delphi workers.
Miller bragged how well Delphi was performing in categories of quality, delivery, and new business. So what's the problem?
Labor contracts. Delphi he said, "inherited . . . Tier 1 labor contracts that are substantially higher than the prevailing union contracts throughout the US supplier industry."
He neglected to add that Delphi inherited, debt-free, all the property, patents, products, machinery, technology, and expertise of a premier Tier 1 supplier. Or that, minus racketeering, the profit margins of Tier 1 products are substantially higher than Tier 2 products. He neglected to mention that the pension was fully funded and the labor contracts were not a surprise like the rise in steel prices. If labor contracts are the sole cause of Delphi's demise, the Delphi bankruptcy was orchestrated well in advance.
"Delphi's hourly labor costs have surpassed $78 for wages and benefits."
"$78"? Every time Miller mentions labor costs, we get a raise. Two weeks ago, it was $76. How does this work?
According to Delphi's Total Compensation Summary published in 2002 and 2004, total compensation rose $1.31 from 2002 to 2004. Since Miller took the helm, it rises more than that every time he opens his mouth. The average hourly worker's total compensation in 2004 (the last year that Delphi mailed a Total Compensation Summary to every employee's home address) was $42.36 which included social security taxes. How did we gain $35.64 since 2004? In Steve's World, accounting is a dramatic art.
The second reason for Delphi's failure was not the racketeering -- i.e., GM demands that Delphi sell parts below cost -- but rather "the decline in GM North American production volumes." Miller ignores the fact that Delphi's content per GM vehicle declined by design despite GM's contractual commitment to invest $1 billion in new business with Delphi. Instead, GM chose to divest from Delphi and thereby undermine American operations and hasten the bankruptcy.
Miller failed to mention that the Coopersville plant sells parts to China below cost. Creative bookkeeping is the magic wand of "restructuring."
What is the solution according to Steve? Miller cites "five big restructuring variables."
- Reduce wages and benefits, and "address costly restrictions and work rules [seniority] that inhibit productivity." In other words, outsource and break the union, but preserve the bureaucracy as an arm of management to keep the rabble under control.
- Financial assistance [extortion] from GM sufficient to cover the transformation to a sweatshop. Miller wants cash from GM. He wants the joint funds. He wants pocket money. He wants a new train set. Since he is the only player at the table with clean hands, he is certain he will get it.
- "[B]e global category killers." He literally salivated over that garish phrase plucked from a B-movie trailer. The long and short of the "restructuring" is that Miller wants to cash out. He doesn't manage manufacturing enterprises. He isn't concerned with the long-term quality or efficiency of Delphi. He wants to chop it up, sell it off, and move on to the next carcass. This description of vulture capitalism isn't speculation on my part -- it's Miller’s track record.
For those of you who believe in political solutions, Miller cautioned, "In the final analysis there wasn't anything any state could do to offset the underlying economics involved." Capitalism is above the law, or perhaps I should say, it is the law. The court serves perpetrators, not victims.
- Reduce "about 25% of our worldwide salary workforce . . . and eliminate up to 40% of our current corporate officer positions." This is typical of a Miller "restructuring." It's a quick way for him to make a million bucks and sleep well.
- Miller purports to "honor our accumulated pension obligations, thereby avoiding termination of our pension plan." Miller's plan requires "a way to stretch out our required pension plan payments" and make the pension contingent on achievement of certain goals. This is the carrot. Those of you who have worked twenty-six years or less at GM-Delphi and are not eligible for the buy-off are expected to submit to wage cuts, increased health care costs, and elimination of the work rules that make the job humane, in order to get a pension that is worth less than a pimp's promise.
I have 27 years seniority. Thus, I am eligible for the buy-off. Take the money and run is not a plan -- it's a scam. We already have a Benefit Guarantee. GM has a contractual and legal responsibility to provide pension, health care, and life insurance for Delphi retirees equal to the benefits enjoyed by GM-UAW members. It shouldn't even be on the table. Furthermore, GM owes active Delphi workers seven years of pension credits. Shoemaker acts like he won something for us, when in fact the offer is less than we deserve. The purpose of the buy-off is to mitigate resistance by decimating solidarity.
The buy-off limits GM's liability -- it does not protect workers collectively or individually. Since Gettelfinger broke open the door for takeaways from retirees, there is no genuine security. Retirement on a fixed income is a perilous prospect without a guaranteed level of health insurance. Furthermore, the buy-off means jobs will be sacrificed. How can adding to the burden of legacy costs balance the equation? The buy-off is a time bomb, not an escape hatch.
The isolation of Delphi workers is not a fight-to-win strategy -- it's a bound-to-lose maneuver. The Delphi struggle must be supported by GM-UAW members and framed in the broader context of social equity for all Americans. Delphi is not a skirmish -- it's a war with national ramifications we can neither avoid nor evade. Any deal that does not commit the corporations to advocate side by side with the unions for national health care is a hopeless half measure, a creature of dissimulation and despair destined to fail.
Mark Reutter wrote in an article for the Washington Post ("Workplace Tremors," 23 October 2005): "There is little evidence that court-supervised reorganization produces a superior company. In fact, quite a few companies that come out of bankruptcy make a return trip, and there is growing evidence that the process diverts capital away from needed investments into the pockets of the restructurers." Without national health care, it is likely that Delphi will return to court to dump the pension. The hourly compensation Miller proposes cannot cover the legacy costs. It's a sham.
Delphi is a test case. If Miller succeeds in breaking union contracts, bleeding pensions, and butchering the workforce while sheltering assets overseas, other multinationals including GM will follow suit. Bankruptcy will indeed become a "growth industry in America." Would the French tolerate such treatment? Would Solidarnosc, the Polish union? Why should Americans? Capitalism in the US has evolved to the point where the courts routinely sanction the transfer of wealth from the masses to the few as a social convention.
Miller spelled it out plainly when he said, "What is at stake here is the basic social contract in our traditional industries." Miller intends to break that social contract so he can sleep well. Soldiers of solidarity intend to give him insomnia ad infinitum.
Miller's Attack Is Not Confined to Delphi -- His Agenda Targets All Workers
While soldiers of solidarity chanted "Steve Miller's Got to Go!" I chewed synthetic lasagna warmed to room temp. I didn't eat anything that touched the meatballs -- they looked like freeze-dried Colorado oysters -- and I eschewed the coffee which emanated an aroma reminiscent of high school biology class. A levy of polite manners subdued the normal aggressiveness of the free-enterprise crowd, but my appetite was in a self-protective mode -- wary and circumspect. I could have been described by security guards as the guy with "a small dark look in his face."
While the corporati wallowed in the warm sty of mutual flattery, the industrial landscape of Detroit disintegrated all around us, and a cold rain descended on the luckless and the damned. The third-world status of Detroit's inner city is emblematic of cities all over the United States. The deterioration is not accidental -- it is not the byproduct of capitalism's vaunted "creative destruction." The destitution was engineered for a purpose: to control labor costs. Solidarity House is surrounded by sweatshops.
On the dais, Miller appeared to be enjoying himself. In Steve's World, that's all there is to enjoy. Despite our differences which are both wide and substantial, Steve Miller and I do have some points of agreement.
Point of Agreement 1: No Partnership between Union and Management
Unlike Gettelfinger, who displays all the social movement of a chicken crossing the road (must you ask why?), Miller makes no bones about the adversarial relationship between union and management. On October 8, 2005, Miller shot jointness right between the eyes. An obituary notice was nailed to the door post of every GM-UAW local union hall.
On March 31, 2006, when Miller petitioned the court to void the union contracts, I actually considered sending him a thank-you card. Miller has done more to organize shop-floor resistance than anyone in the UAW.
Point of Agreement 2: The Problem Isn't Globalization
I agree. The problem is domestic. We have failed to organize, and the litany of excuses can't withstand the scrutiny of history.
Was it easy when Walter Reuther got his head busted open at the Battle of the Overpass? Was it easy when he took a double-barrel shotgun blast in the back? Was it easy when Victor Reuther was shot in the face and blinded in one eye? Was it easy for John L. Lewis to tell the Governor of Michigan that, if he sent in the National Guard to oust sitdown strikers, "the militia will have the pleasure of shooting me, too"? It has never been easy. It has never been fair. The bosses have never been nice. We can talk partnership until the outhouse blooms roses, but it won't change the stink of the bastards in charge of our livelihoods (as I said at the 33rd UAW Constitutional Convention [Live Bait & Ammo #31]).
The UAW should have built a union hall across the street from every transplant in America. Instead, we built a golf course at our Family Education Center in Black Lake, Michigan. Our UAW International reps have turned into caddies for "economic hitmen" like Miller, Wagoner, and Ford.
Miller said, "Globalization gets blamed for this outcome but it is only part of the story." The full story is, as Miller notes, less than 20% of the auto parts industry is organized. Only two of the foreign transplants located in the US are organized. Instead of organizing workers, the UAW formed a partnership with the Corps. As a result, rather than taking workers out of the competition, which is the goal of unionism, workers are subjected to "a competitive cost structure and modern operating agreements" which impoverish families and strip workers of their dignity.
Miller notes that transplants are competing "in our backyard with good pay and benefits and flexible work rules." He declares that "productivity has perhaps been more important than basic wage levels in overturning the established order." He conveniently ignores the enormous productivity gains of UAW workers. We make as many vehicles and parts as we did before with half as many workers. "Flexible work rules" is simply coded language for unrestricted authority to whip the horses and purge solidarity, democracy, and equality from the workplace.
The competitive disadvantage of domestic auto makers in the US is a consequence of the UAW's failure to organize which begs the question: Why would anyone want to join a union that is partners with the boss and bargains for concessions?
If the UAW doesn't take a stand at Delphi, a stand that unites GM and Delphi UAW members and the broader community of uninsured and unsecured workers and retirees, the union-busting plan embodied by Miller's brand of vulture capitalism will spread like an epidemic. Retreat is not an option when your back is against the wall.
Point of Agreement 3: Miller Recognizes We Need "Broader-based Health Care Programs"
I agree. Where we differ on health care is that, for Miller, it means transferring the cost from employers to workers. For soldiers of solidarity, it means universal health care.
Miller said that when workers retired at "age 65 and then died at age 70 . . . the social contract inherent in these programs seemed affordable." In The World according to Steve, now that we stand a chance of actually enjoying our fair share of those benefits, it's unreasonable.
He explained that in the old days "employers passed along the costs to customers." But, now, "since their customers won't pay for it when they have choices," it's not viable. Miller asserts, "Somebody has to pay," and it isn't going to be him and his gang of shrugging Atlases.
Miller's reasoning is fallacious. First of all, Toyota isn't selling vehicles cheaper than GM. So "choices" that customers make have nothing to do with health care or pensions. They make choices based on personal preferences, not an automaker's legacy costs. But more significantly, the customer is getting double-billed.
As Miller explained, when the promises were made, the cost was shifted to consumers. Where is that money now? Rather than fulfilling their responsibility to retirees by setting the money aside in a trust fund, GM squandered it. GM, like Delphi, spent our legacy on assets overseas and extravagant compensation for executives. Now Miller proposes passing the legacy cost on to taxpayers, so that consumers will in effect pay for the same thing twice.
If taxpayers are going to get stuck with the bill, the investment should have a commensurate return, i.e., health care for everyone, not just the privileged few. Furthermore, the return should ensure a level playing field for all employers. National health care is the only viable social-economic solution to the crisis in American industry and our communities.
If UAW members resist health care concessions and connect the struggle to all of the uninsured people in America, we may be able to leverage the automakers into support for national health care. The idea is not improbable. GM's 2004 annual report to stock holders stated: "we need to encourage access to affordable healthcare coverage for all our citizens. It's simply not acceptable for over 45 million Americans to be without healthcare coverage. This causes a tremendous cost shift to those that do provide coverage, through higher bills to cover the costs of the uninsured."
Neither Delphi workers nor the UAW as a whole can succeed without broad public support. Such support will not come until the UAW is perceived as a partner in the pursuit of social and economic justice for all, not just their own members. The success of organizing in the thirties was due in part to the public's recognition that unions promote the common good. We will succeed in organizing and bargaining when the needs of the broader community dovetail with the goals of the union. Forty-five million Americans need our support.
The tide that raises all boats is social movement unionism; a strategy of confrontation that links the struggle of one group with the struggle of all groups; a strategy of concerted activity that ensures a victory for one -- GM-Delphi -- is a victory for all; a strategy for striking action that rings the bell of liberty and justice in every American's heart.
Miller's attack is not confined to Delphi. His goal is the degradation of all working people. Miller insists we can no longer afford to pay good wages and benefits. Soldiers of solidarity see it differently. Our society can no longer afford extravagant rewards for fraud and incompetence. We can no longer afford to allow our legacy to be shipped overseas while our own citizens are deprived of a decent standard of living, quality education, health care, and security in retirement. We can no longer afford to support vulture capitalists. We can no longer tolerate the bullshit that pervades The World according to Steve by Steve Miller.
For more on Delphi, visit www.soldiersofsolidarity.com and www.futureoftheunion.com.
Gregg Shotwell is a Delphi worker and UAW activist (Local 2151). Many of his writings are found at <www.greggshotwell.net/> and <www.soldiersofsolidarity.com/>.