The days when American manufacturing workers could expect high wages, long vacations, gold-plated health coverage and generous retirement pensions are over. At least in the eyes of Robert S. "Steve" Miller, the chairman of Delphi Corp. He believes companies have made promises they can't keep, and he is blowing the whistle.
Miller unleashed a storm of protest from the United Auto Workers and other unions when he plunged Delphi, the sprawling auto-parts giant, into bankruptcy protection this month. The move, he believes, is the only option for getting Delphi out from under the burden of high wage, health care and pension costs.
In an interview Friday, Miller called the workers honest, loyal, hardworking people who took jobs in the auto industry and "played by the rules" and "cannot be blamed for pursuing the American dream." The problem, he said, is that industrial companies, although they have tried, can no longer deliver.
"All of us have been caught short by fast-changing global economics," Miller said. "Our people are being severely impacted. I don't blame them for being frightened, uncertain and even angry."
Miller, at 63, is an industrial powerhouse. He has experience in industries undergoing profound change: steel, airlines and autos. He was chief executive of Bethlehem Steel Corp. from 2001 to 2003, when steel companies across the industry were imploding, crippled by a surplus of U.S. mills and low-cost international competition. Bethlehem went bankrupt in 2003 and was sold off to a bigger steelmaker. Miller was on the board of UAL Corp. when its United Airlines unit fell into bankruptcy. Now, as chairman and chief executive of Delphi, he is becoming one of Detroit's toughest voices.
In the interview, the plain-spoken Miller defended his decision to take the company into bankruptcy court. He said that in the bankruptcy process, everyone was losing something. "In our case, we ran out of money," he said. "Now, we have stockholders; they've basically been wiped out by this. We have bond holders; they, in good faith, loaned money to this company, and now they're being told they may not get any back. We have a bankruptcy court system that is designed to sort out the pain among all the people who are expecting to recover from this."
Miller said Delphi could not "extract more money from our customers than what the global market says that the parts are worth. That's it."
Delphi, a former unit of General Motors Corp., was split off as a stand-alone company in 1999. As part of the separation deal, the unions negotiated wage, benefits and health care coverage that was about equal to what they received as GM employees.
To rebuild Delphi, Miller's team is taking on the UAW, one of the nation's most powerful unions. The company issued a new contract offer last week proposing that union workers accept wages of as little as $9.50 per hour. The proposal could reduce vacation days, health coverage, pensions and possibly other benefits. In response, the UAW called the new deal a "dismal idea" that displays "a total lack of concern" about the impact it would have on Delphi workers and their families.
Between now and the end of the year, Miller and the unions must try to work out a compromise. If the sides don't have a substantial agreement by then, Miller said Delphi would ask the bankruptcy court to intervene. The move could eventually leave decisions about pay and benefits, which have historically been worked out at collective bargaining tables, in the hands of a judge.
One way or another, the union workers will face tough decisions. Miller had to face his own tough decisions at Bethlehem Steel. Ultimately, he sold the failing manufacturer after he could not persuade union workers to make enough concessions. He said he was now trying to be a little more flexible. He said he was willing to let auto workers "trade one thing for another."
"Example, vacation time," Miller said. "Do you still want to have weeks and weeks and weeks of vacation time, or would you rather have more pay and less leisure? That's a choice. It was okay when we were wealthy as a corporation, we were able to do both."
Miller is also putting into play other hard-won union contract protections. He wants more flexibility to outsource work to contractors and the ability to cut jobs when factories are idle. Under current agreements, auto companies pay laid-off workers nearly the same wages as if the plant were still operating. The auto workers have defended this policy as a way to shield auto worker paychecks in an industry that can swing relatively quickly from boom to bust. If the union contract is voided in court, the unions have the option to strike, which could cripple the industry.
Miller has also said some plants will have to be closed as part of the reorganization, drawing the ire of politicians from around the country. Last week, Miller outlined his strategy on Capitol Hill, including a one-on-one meeting with Sen. Hillary Rodham Clinton (D-N.Y.), who is worried about the fate of a Delphi factory in Lockport, N.Y., the largest employer in the region.
Miller said his arrival at Delphi doesn't portend the death of U.S. manufacturing. But he said Delphi will be remade into a company that focuses less on low-end parts such as spark plugs and parts where "you can fit 1,000 in a box." Those, he said, will be built in low-wage countries.
"And we're not talking about whether we're going to pay $30 an hour or $10 an hour," he added. "Those are going to be made for $2 an hour someplace else and shipped -- period."
Steve Miller then, at Bethlehem Steel, and now, at Delphi.