Delphi Corp. Chairman Robert S. Miller Jr. yesterday defended his plans to close factories and sharply cut workers' wages and benefits while sweetening severance packages for some executives at the auto-parts supplier, which is operating under Chapter 11 bankruptcy protection.
Miller said at a news conference at Delphi headquarters in Troy, Mich., that he was doing what he had to do "to rescue Delphi and perhaps the industry."
He said the number of factories to be closed will be determined partly by how quickly Delphi's unions get to the negotiating table. Miller suggested that some factories could be saved if negotiations pick up quickly and can be handled outside court. "In the end [the union] will do it and they will do it in the right way," he said.
A spokesman for the United Auto Workers said its leaders were prepared to continue negotiations with Delphi. He said the UAW has worked with Delphi in the past to find ways to reduce costs.
Delphi, the world's largest automotive parts supplier, filed for Chapter 11 bankruptcy protection on Saturday. It has 185,000 employees. At 31 plants in 13 states in the United States, it has 33,000 employees, 24,000 of whom are represented by the UAW and 6,000 of whom are represented by other unions.
Miller said Delphi increased severance packages for some top executives just before the bankruptcy filing because he had to act to keep his management team. Miller, whose own pay includes a $3 million signing bonus and a $1.5 million annual salary, said executives had to sign agreements to stay with the company to be eligible for the packages. "They can't quit. We blocked the exit doors," Miller said.
Delphi is demanding wage cuts of 50 percent or more from unionized workers, relief for Delphi's pension and health care bills and more power to close or sell factories.
In Michigan, Gov. Jennifer M. Granholm has criticized the severance packages for upper management while Miller is demanding "brutal, draconian pay cuts" for other employees. Ronald A. Gettelfinger, president of United Auto Workers union, called the severance deals a "disgusting spectacle."
Miller responded to complaints he hasn't addressed rank-and-file employees, except in a company-wide voice mail, but has found time to visit newspaper editorial boards and conduct news conferences.
"I do not blame these people," Miller said. "They are being hurt. Their expectations are being dashed, " Miller said. "Globalization has swept over them and they are extremely angry. They need to lash out at somebody . . . me."
Miller said that he had a 20-minute discussion about Delphi's problems this morning with Sen. Hillary Rodham Clinton. Clinton, he said, called about the plant in Lockport, N.Y., where the Associated Press reported that workers are threatening to strike.
Miller said he doubted that union leaders would send workers out on a strike, which he said would only carry the unions over a "suicide cliff." A strike, he said, would hasten plant closings or expand the list of factories that might be closed.
Through the bankruptcy law, he said, he has powerful tools to get more onerous relief from the unions that he hasn't chosen to use yet. "The best thing they can do for their own financial security is stay on the job," he said.
Miller played a role in the restructuring of Bethlehem Steel Corp., auto-parts maker Federal-Mogul Corp. and other companies. He was involved in Chrysler Corp.'s financial restructuring when the federal government provided loan guarantees to prevent its bankruptcy in 1979.
Miller said he wanted a "full fair shot" at General Motors Corp.'s future business to help ensure Delphi's financial health after it emerges from Chapter 11 protection. He said he had not asked GM to reprice its current contracts, which he said bankruptcy court gives Delphi more leeway to do.
Miller said GM had to face up to its problems with labor costs as Delphi was doing. By taking Delphi to bankruptcy court, he said he was making the decisions necessary in the auto industry after years of promising high wages and sweet health care and retirement benefits.
"All I've done here is blow the whistle," he said. GM declined to comment.