Sunday, November 20, 2005

DELPHI GIVES WORKERS CHOICE OF PAY CUTS OR SHUTDOWNS

By Diane M. Grassi


The erosion of the manufacturing sector in the United States started decades ago, however the playbooks used by CEO’s have changed. Instead of renegotiation of labor contracts and requests for concessions, the threat of permanent job loss, steep rollbacks of salaries and the complete elimination of employee benefits has replaced management propositions.

We have heard of offshoring of the apparel and textile industries, the furniture and steel industries and more recently the givebacks by airline employees including pilots. But different from those scenarios is a new variation or precedent being set with the bankruptcy filing October 8, 2005 by the Delphi Corporation, one of the world’s largest auto suppliers, formerly a division of General Motors Corp., prior to 1999.

At stake are thousands of U.S. jobs and more importantly the ultimatum involved of slashing up to two-thirds of workers’ hourly wages. Delphi currently employs 50,600 workers including employees in Canada and 45 manufacturing plants in 16 states. 34,000 are unionized in the U.S., with 24,000 United Auto Workers Union employees and 8,500 from the International Electrical Workers Union, in addition to 12,000 retirees also impacted.

In an original proposal by Delphi’s CEO, Robert S. Miller, who took over the struggling parts-maker in July 2005 following his helm at Bethlehem Steel Corp., he asked for the deflation of wages for production workers at a $10.00 to $12.00 per hour range, where the average wage is presently $26.00 an hour. Now, he has changed those figures to $9.50 or $10.00 an hour. New-hires would see a starting wage of $9.00, down from the present $14.00 wage.

In addition to changes in wages, Delphi has an extensive list of requirements it has pitched to the UAW in a letter sent October 21st. They include: large increases for out-of-pocket healthcare costs presently from $500.00 per family per year increased to $5,000.00 per family per year; elimination of dental and vision insurance; reduction of pension benefits to reflect lower rage rates and no pension plan offered after January 1, 2006 for new-hires; elimination of traditional 8-hour overtime pay, now only after a 40 hour week; cost-of-living adjustments and profit sharing will be eliminated; reduction in vacation and sick days.

Unlike the agreement arrived at recently between the General Motors Corp. and the UAW, Delphi’s figures are far more drastic. For example, the out-of-pocket expense for healthcare per family per year at GM is $752.00 as opposed to the proposed $5,000.00 per year by Delphi. Additionally, Delphi’s proposal would allow it to outsource certain jobs performed by skilled-trades workers in the U.S. and the unrestricted right to close, sell or consolidate most of its U.S. plants over the next three years. The proposal also slipped in a radical cut in union representatives or 1 for every 250 workers. No strikes, work stoppages or slowdowns would be permitted during the term of the proposed contract to run through December 31, 2011.

Should no agreement be reached with the unions and Delphi by December 16, 2005, CEO Miller has asked U.S. Bankruptcy Court Judge Robert Drain to revoke its existing labor proposal on January 17, 2006 in order to freely issue its own contract directly to the unions. Judge Drain complied with the request. With the only option left at that point, the unions have discussed the possibility of striking which evoked a response from Miller stating, “Any plant that wants to be at the top of our plant closures list should engage in [such] industrial action as a way of sending a message.”

Delphi will proceed with cuts to salaried employees simultaneously to negotiating with those unionized.
All told, Delphi employs 1,850 white-collar or non-executive workers and 463 executives with 90 senior executives. They know that their jobs are also at risk. They also face reduced health care and pension benefits in addition to those retired salaried workers who will lose all medical benefits beginning in 2007. The most severely impacted of several states in which Delphi has plants will be Michigan, where Delphi is based. It would amount to losses of $4.8 billion imposed on Michigan taxpayers due to the lost income taxes and tax revenue, 2007 alone would cost Michigan $390 million.

If this were not so serious an issue it would almost be laughable. It suggests that Ebenezer Scrooge has come back from the dead. However, the method of using the bankruptcy process for a national corporation’s leverage over workers’ wages and rights, while used in the past, has been brought to new heights in this scenario. And Robert Miller’s dossier includes the bankruptcy filing of Bethlehem Steel in 2003, when he was CEO, and was on the Board of Directors when United Airlines filed for its bankruptcy. Miller defends his decision to file bankruptcy for Delphi because “we could not extract more money from our customers than what the global market says that the parts are worth. That’s it.”

Jim Clark, President of the International Electrical Workers Union, states that “These are not cushy jobs. These are labor-intensive jobs. In the global economy, workers are gong to be exploited. And just because they’re Americans doesn’t mean a big corporation won’t try to pay the least amount that people are willing to work for.” Clark also realizes that means that Delphi “is playing them off against workers in lower-wage countries such as Mexico and China.”

In a recent development, GM has offered to discuss assisting in the pension plan for Delphi employees by offering buyouts to encourage early retirement of its employees. In 1999 when General Motors created Delphi from its auto parts division, it had guaranteed pensions and benefits to Delphi employees. How this would be structured, in light of Delphi’s demand for givebacks, is still under review by GM. But GM, with its own revenue problems cannot risk a work stoppage by Delphi at this time, as it has lost approximately $3 billion so far in 2005. However, GM’s offer does little to solve the heart of the problem from which no U.S. industry is immune.

Ron Getelfinger, President of the UAW, believes that Delphi’s contract proposal “is designed to hasten the dismantling of America’s middle class by importing Third World wages.” Additionally, “the proposal faithfully reflects a vision of America in which an elite few live in luxury while everyone else struggles to make ends meet.”

While there are no guarantees in business, the lack of a decent wage for American workers will ultimately guarantee less revenue generated for the economy, more individual debt and less discretionary spending. Unfortunately, this logic has eclipsed the thinking of those in charge of U.S. corporate America. The pity is they do not even care.

Saturday, November 12, 2005

Shortage of Equipment Threatens National Guard Preparednesss

By Diane M. Grassi


The national disasters suffered in the United States Gulf region this year from Hurricanes Katrina, Rita and Wilma may have reaped a silver lining after all. Although mass criticism has been lodged against federal, state and local governments as well as at key elected officials and government appointees, the necessary disaster relief efforts exposed deficiencies concerning the nation’s preparedness in both disaster relief and homeland security, with respect to the state of equipment inventories used by the Army National Guard. While the news is less than encouraging, it may in the end result in a better run equipment replenishment system and ultimately help in saving the lives of American soldiers.

Since the official beginning of the War in Iraq, equipment availability problems and replenishment have largely had an impact on Reserve and Guard troops fighting abroad and upon return stateside. The Department of Defense provides the most modern equipment to units that deploy first. Later deploying troops such as most Army National Guard units inherit older items in the Army’s inventory. In addition, the National Guard serves a dual state and federal role unlike active duty combat troops. The problem comes in when 50% of the active duty troops are made up of Reserve and Guard soldiers serving in Iraq and Afghanistan, limited in some cases to inferior training equipment due to deployed gear, and in effect, equipment shortages stateside.

Because Army National Guard units have been told by the Department of Defense to leave such vital items such as helicopters, trucks, amphibious vehicles, construction cranes, satellite communications, radios, and night vision goggles in Iraq, it leaves the Guard in the U.S. vulnerable in fully carrying out emergency operations such as natural disasters. But even though it is logical that much equipment must be left in Iraq as the U.S. military has no end date for operations there, there is no system in place to replenish necessary equipment which has been removed from individual U.S. states, to have it available for either U.S. emergencies or enforcement of national security.

According to the National Guard Bureau, the federal entity responsible for the administration of both the Army National Guard and the Air National Guard, the problem continues to get worse across the country, as a great deal of Guard equipment comprised of approximately 64,000 items valued at more than $1.2 billion, has either been destroyed or left in Iraq and the Army cannot account for over one half of it. One would think that the Department of Defense has knowledge however of what equipment has been deployed and that which needs replacement. But stunningly revealed in a Government Accountability Report in October 2005 at the request of the U.S. Congress, the U.S. Army “does not have a complete accounting of these items or a plan to replace the equipment.”

A Department of Defense policy, DOD Directive 1225.6, “requires the services to develop a replacement plan for equipment transferred from the reserve component to the active component for more than 90 days.” But the Army only centrally tracks “the portion of the Guard’s equipment that it expects will remain in the theater for the duration for current operations…..Items that units transfer to other units may also remain in theater for up to 3 years.” But the Army does not have a complete accounting of these items because they are not tracked centrally.

When asked by the GAO why the Guard does not know when or if the items will be returned to National Guard bases stateside it was told by Army officials that “they did not track and develop plans to replace Guard equipment because there were many other priorities in the early phases of the war, and the strategy of having units leave some equipment was expected to be a short-term measure.” However, the U.S. is far past the early stages of the war at present. And an underlying problem for deployed National Guard units is that lack of accountability of the Guard’s equipment stocks retained overseas has resulted in the lack of assuredness of which equipment is needed to bring and which will be left for the training of troops potentially deploying.

Many natural disasters as well as terrorism come without warning. In the case of hurricanes there is a time period for evacuation, unlike tornadoes or earthquakes. As to the final damages and loss of life from such, there is no telling. And when disaster strikes in the U.S. the National Guard, while belonging to individual states under the auspices of each state governor, in a national disaster the president has the prerogative to federalize Guard troops. However, the various types of equipment available as well as Guard members are limited to what each state can provide. In that regard, many governors have been outspoken in calling for more transparency between the Department of Defense and states’ governors in order to better protect Americans stateside.

With only 34% of essential war fighting equipment in the U.S. according to Mark Allen, chief spokesman for the National Guard Bureau, down from 75% prior to September 11, 2001, many governors and lawmakers in Washington now believe that Hurricane Katrina “was more complicated because of the Guard’s equipment shortages,” according to the GAO report. Although governors have agreements to share equipment in a federal emergency with the Guard in other states, it is believed that there is only so long that such a system will suffice. Given the long-range deployment of troops in Iraq and proposed homeland security duties stateside, recently announced by Secretary of Homeland Security Michael Chertoff, the future equipping of Guard units will appear to get more and more complex.

Senator Christopher “Kit” Bond (R-MO) who heads the Senate National Guard Caucus said, “The Guard has a dangerously low level of equipment as the primary responder to domestic disasters.” And P.J. Crowley, Director of Homeland Security at the Center for American Progress and a former member of the National Security Council states that “The Guard’s expanded mission hasn’t yet translated into expanded resources and equipment.”

While the GAO report points out that the Guard “is working on an old business model in which it only deployed in the later stages of a major conflict if needed,” both the Senate and House of Representatives Armed Services Committees have inserted extensions concerning acquisition reforms for equipment in their versions of the fiscal 2006 Defense Authorization bills, still presently pending ratification. It is worth noting that the 2006 Defense Authorization bill must reach the desk of President Bush by November 18, 2005 in order to avoid a defense-spending shortfall for Fiscal Year 2006, which commenced October 1, 2005. It provides funding for the War in Iraq through February 2006.

Bringing to light to issues such as shortfalls in equipment for our troops and in systems management is but an example of support for those most deserving of attention. Whether or not one agrees with the political landscape involved, it is crucial to remain supportive of our troops. Sometimes, however, it requires delving beneath the surface, for the United States only remains as strong as are our armed forces. On this Veteran’s Day, we remain united. Godspeed to each and every one of our troops!

Saturday, November 05, 2005

RETURN OF NEW ORLEANS' DISPLACED, NO EASY TASK

By Diane M. Grassi

Now that the cameras of the news media and press have largely left the area of New Orleans, Louisiana, its parishes and the Mississippi Gulf, in a post-Hurricane Katrina and Hurricane Rita world, the real test will be for those residents who no longer have homes or jobs, as they face the dreaded winter season with funds and social services quickly running out. While no longer expedient for television networks to cover the disaster zone, Louisiana residents remain in disaster-mode.

Ray Nagin, mayor of New Orleans, LA, has tried single handedly to stir up a public relations campaign for his devoured city, with little success. Within a couple of weeks post-Katrina he encouraged his residents to return to areas which were still uninhabitable due to non-restored electricity, and sewer, health and emergency services all but nonexistent. Nagin delayed his ‘welcome back’ by a week only to order everyone out again as Hurricane Rita bore down on the Gulf. He suggested that the state legislature allow 500-room hotels to become casinos in order to bring in city revenue, only to be dismissed by Louisiana Governor Kathleen Blanco. Mayor Nagin then announced he would have to cut 3,000 civilian city government jobs while his police superintendent resigned in the midst of it all.

But the essential problem facing those now displaced primarily from the city of New Orleans and its metropolitan area is finding jobs and housing. Many would like to return. But as Mayor Nagin continues to lay down the red carpet once again for his city’s residents, neither he nor the state government has spent time nor allocated resources to housing these residents in order for them to partake in the rebuilding of their city. The present primary residents consist of contractors, laborers and members of the National Guard, some in the medical community and limited numbers of restaurant and hotel workers. With Bourbon Street restaurants in the French Quarter coming back to life, but open far fewer hours partly due to a shortage of workers, their customers are not the desired tourists but crews doing demolition and environmental cleanup, still necessary in assessing the city’s needs.

However, the problems endured by the New Orleans’ populace is far larger than the infighting between mayor and governor or state and federal government agencies, still being scrutinized over decision making and efforts both pre and post-Katrina. Every sector of business and economic strata has been knocked off-line in the New Orleans’ metro area indefinitely, in a now bankrupt city with its future fiscal health a big question mark.

Professionals such as doctors who have no hospitals in which to practice medicine or lawyers without a courthouse in order to try their cases have far better chances of relocation and finding new employment than the average bread winner. Yet it would be foolish to overlook the fact that basic services and the infrastructure of New Orleans are at the core of rebuilding the city. And each business or service collectively employ thousands of people who are middle or working class who do not have the resources to sustain themselves indefinitely. And the very city which seems anxious for it residents to return, appears incapable of doing it the right way.

The federal government allotted some rental assistance totalling $2,358.00 per family which was approximated for three months rent in a one bedroom apartment, allocated to those who either completely lost their homes or those deemed uninhabitable. Yet there are systemic problems in meeting the qualification for the assistance and then the ultimate wait for actual receipt of the housing voucher. There needs to be required proof by state inspectors and then insurance companies, for those with insurance, in order to verify the condition of one’s home. It is only then that the rental assistance check will be approved. Through October 25, 2005, inspectors in Louisiana had completed 362,308 inspections, yet still have 446,168 more to go. Many residents still await their rental vouchers as they live in temporary FEMA provided hotel rooms, some trailers, or Red Cross shelters.

For those families who evacuated New Orleans with children, they have enrolled them in public schools in other cities in Louisiana or Mississippi as well as in other states in the south such as Texas, yet as far away as California and New Jersey. And many families who have received the $2,358.00 know that without employment their chances to continue to pay rent are dwindling even if lucky enough to have found permanent housing. Many still living in hotels, shelters, or sharing homes with extended family have trouble looking for apartments without access to a home telephone, credit cards, or cash.

An underreported fact is that for those families who were already in the welfare system and receiving Section- 8 housing from the federal government, their plight is far easier. There are more social services available to them and their immediate needs are being tended to far more quickly than the homeowner who did not have a mortgage and little overhead, yet still had a job or steady income and now has little hope of ever owning a home again.

There have been 296,000 unemployment insurance claims which have been filed since Hurricane Katrina in New Orleans alone. In all of 2004 there were a total of 196,000 claims filed. But lawmakers and the press have unfairly reported that Louisiana residents do not want their jobs back, since many temporary jobs remain unfilled. Again, without the essentials of housing, electricity, schools, water, gas and public transportation, businesses will remain closed. Most job seekers are looking for permanent work and would like to return, but the prospects of permanent work or housing remain bleak. There is a definite symbiotic relationship between housing and employment, neither of which the mayor has clearly addressed.

To make matters even more exasperating for some, New Orleans renters also face eviction notices even though they are no longer living there. Landlords who are anxious to start renovating in order to rent to non-local temporary contractors at far higher rents, are issuing eviction notices even though some renters have offered to pay their rent while not there. For short-order cooks and wait staffs wishing to return to their jobs on Bourbon Street, sky-high rents now face them upon their return. There has been no moratorium, however, on rent gouging, which is an area the mayor could concentrate on while he urges his residents to come back. And while employers can apply for help with housing for their displaced workers through the Louisiana Economic Development Office as well as FEMA, they may do so only if workers are doing “infrastructure-related jobs.”

For those displaced looking for employment in cities which are new and vast in square miles, getting around using public transportation is no easy feat either. While most Katrina victims did receive 90 days worth of food stamps and 30-day bus passes provided in cities such as Houston, Dallas and Austin, TX, the cost of transportation and food without immediate employment will leave most with no choice other than to apply for welfare benefits. And while much has publicly been made in the press since Katrina about the non-coverage of the poverty existence in New Orleans, not enough has been focused on the average workers made up of cab drivers, waiters, musicians, bus drivers, teachers, office workers and courthouse clerks, to name a few. While not glamorous, they were livelihoods for those who have gotten short shrift in the media and now by their very own city and state.

For the nearly 1 million displaced residents of the greater New Orleans area as well as the Mississippi Delta primarily from Hurricane Katrina, the rest of the U.S. is now left to micro-manage each individual family crisis. Politics will most likely blur the mistakes made by the federal and state governments with hurricanes Katrina, Rita as well as Wilma in Florida While more funds will be allocated for rebuilding efforts they remain subject to mismanagement and failed oversight, although Americans have been told that will not be the case.

Lost in the mix will be the day-to-day recovery and efforts required for not only getting the displaced back on their feet, but ultimately giving them the choice to return to their home city. Strong leadership and creativity will be necessary in doing so. So far, neither has been present and there are no indications that inept bureaucracies will suddenly address imminent needs. Most think that the wrath of the 2005 hurricane season is over. But for its victims, it may have only just begun.