Delphi white-collars shafted; union to help

[Detroitnerd]

How the White-Collar Tribe Got Shafted

The Delphi Incident

By DAVID MACARAY
Salaried, white-collar, non-union employees of Delphi [[the former General Motors-owned auto parts conglomerate), in Warren, Ohio, were recently treated to a bitterly cruel lesson in the benefits of belonging to a labor union.



As part of GM’s government-supervised bankruptcy, Delphi’s salaried workers were stunned to learn that a union contract trumped all that touchy-feely “team building� gibberish they’d been fed over the years. It was revealed that, while Delphi’s union members would be receiving their full pensions, a significant percentage of Delphi’s white-collar employees would be receiving only partial ones.


Although the PBGC [[Pension Benefit Guaranty Corporation), by law, insures company pension plans, PBCG payouts are tricky; they’re arranged in such a manner that maximum “caps,� based on complicated formulas that take into account an employee’s age and level of benefits, come into play. Under the PBGC, older workers do far better than younger ones. And in regard to the Delphi deal, those employees caught in the middle—in their fifties, with many years of service, but too “young� to retire—were hit the hardest.



No one on labor’s side is gloating or rejoicing. Not only did the unions who represent the workers—United Auto Workers, United Steelworkers, International Union of Electrical Workers—not want to see Delphi’s salaried employees get shafted, the union’s legal team has offered to help recover what’s coming to them. Which is ironic, given how unlikely it would have been for this salaried, white-collar “tribe� to have reacted similarly had the shoe been on the other foot.



Full article at: http://www.counterpunch.com/macaray11242009.html

[noggin]

Just goes to show you that Obama only cares about his union buddies. Although only 12% of the work force today is unionized, he will throw the other 88% under the bus. Change, change, change.

[barnesfoto]

Just goes to show you that some people don't read articles in English very well, and are so small that they take delight in the misfortunes of others.

[noggin]

There is no delight in the white collar workers losing their pensions. The article does show the favoritism given to union workers with this government and the rest are punished for not being in the correct political group. You better read the article again.

[Gistok]

There is no delight in the white collar workers losing their pensions. The article does show the favoritism given to union workers with this government and the rest are punished for not being in the correct political group. You better read the article again.

Funny how you mentioned "this government"... as though this is all Obama's fault...

One would think that 12 years of a Republican congress and 8 years of a Republican president would have set things straight... but they must have had their collective heads where the sun doesn't shine... or maybe their big-business lobbyists didn't give their blessings...

Funny that...

[MikeM]

I didn't see how the article showed any favoritism by Obama. Didn't Delphi go into bankruptcy five years ago? Didn't they file in New York? I think the New York bankruptcy court gives more consideration to creditors claims than any other court.

[Cincinnati_Kid]

Funny how you mentioned "this government"... as though this is all Obama's fault...

One would think that 12 years of a Republican congress and 8 years of a Republican president would have set things straight... but they must have had their collective heads where the sun doesn't shine... or maybe their big-business lobbyists didn't give their blessings...

Funny that...

Totally agree. Everyone wants to throw Obama under the bus, when clearly "Dumbo" the Elephant party are the ones that screwed up this country. Who said it was going to be easy cleaning up this mess he inherited?

[EastsideAl]

The unions had a contract [[you know, that legally binding agreement between two parties that rich folks and libertarians get all on their high horse about - except when the results aren't in their favor) and the white collar employees didn't. It's not about anyone "favoring" unions, it's just a simple matter of the law. Sort of puts to rest all that blather from the right about the beneficence of corporations [[as if any further evidence was needed) though, doesn't it? When push comes to shove the folks higher up are more than happy to take theirs, and then some, and screw over the guys under them as much as they can get away with.

[ndavies]

MikeM the facts aren't shown in the articles mentioned. The Obama administartion did come in and make the PBGC handle the union pensions differently than the salaried pensions. It forced GM into "Topping up" the Delphi Union Pensions before they were spun off to the PBGC.

As described in this article from august:

http://www.nytimes.com/2009/07/23/bu...23pension.html

[ndavies]

The unions had a contract [[you know, that legally binding agreement between two parties that rich folks and libertarians get all on their high horse about - except when the results aren't in their favor) and the white collar employees didn't. It's not about anyone "favoring" unions, it's just a simple matter of the law. Sort of puts to rest all that blather from the right about the beneficence of corporations [[as if any further evidence was needed) though, doesn't it? When push comes to shove the folks higher up are more than happy to take theirs, and then some, and screw over the guys under them as much as they can get away with.

This has nothing to do with the contracts. When a company goes bankrupt the contracts and pensions become null and void. The pensions are spun off and guaranteed for pennies on the dollar by the PBGC. There is a fixed way of handling pension defaults that has been done for decades. Both salaried and union workers pensions would normally be handled exactly the same way. In this instance the Obama Administration came in and made GM put money into Delphi to handle Delphi's Union pension obligations.

The only reason the Obama administration was able to do this was because they controlled GM.

This is a complete departure from how this issue is normally handled.

Ask any steel worker from the 80's what happened to their pensions. Both Union and Salaried Had their pensions slashed the same amount.

[stinkbug]

Just goes to show you that Obama only cares about his union buddies. Although only 12% of the work force today is unionized, he will throw the other 78% under the bus. Change, change, change.

Great fucking math skills. Really makes for a convincing anti-Obama arguement.

[MikeM]

Thanks Ndavies, I suspected something was missing. So this agreement between GM, Delphi, and the PBGC was forced upon GM or was it voluntary on GM's part? And this had to be approved by the judge?

From the article:

G.M. issued a statement on Tuesday [July 21] saying that it would “top up” the pension benefits for those in the union whose payments could be shrunk to the government limit. The statement cited the agreement G.M. negotiated with the union in 1999, in which the automaker had promised not just to pay a supplement but in fact to take back the union pension plan if Delphi could not run it.

“As with other union agreements that it has assumed from the old G.M., General Motors Company will honor those commitments,” the company said in its statement.

[ndavies]

Sorry Mike, I don't know those details. I know this was all baked into the GM bankruptcy plan.

[dharma4313]

As a former Delphi engineer [[actually AC-Rochester, before local 651 stunk it up and we got the boot), all I can say is this: the UAW fought all the battles, and we always shared in all the spoils. There's a parable in here somewhere.

[MikeM]

Are contracts literally null and void going into bankruptcy? Obviously they would be up for review, but I assume it would take the request of a creditor or management to have the judge terminate or modify them. I had friends have their pension distress-terminated in bankruptcy. I've had other friends who agreed with management pre-bankruptcy to terminate theirs in exchange for other benefits. I had my benefit frozen in an agreement with management prior to entering bankruptcy. I suppose creditors could have challenged it, but it was approved by the judge.

It looks as though Delphi's wasn't terminated until well into bankruptcy. They discontinued funding it, and the PBGC forced a stressed termination. Salaried employees are still getting a fraction of their benefit but the UAW members' is being supplemented by GM, per their agreement when GM spun off Delphi. I can't tell if that was at the request of the PBGC or Obama arm-twisting GM.

[MikeM]

Sorry to hear that dharma. Sounds like the UAW is working on getting yours too.

[EastsideAl]

GM made a benefit guarantee agreement with the UAW back in 1999 when Delphi was spun off of GM, that if Delphi for any reason could not meet their pension and retirement benefit obligations to UAW workers GM would pick them up. That guarantee was reiterated as part of the memorandum of understanding that the UAW, Delphi, and GM reached as part of the restructuring of Delphi in its 2007 bankruptcy. This memorandum, which extended the contract and guarantee to 2011, was approved by the bankruptcy court. When I said they had a contract I meant it.

[ndavies]

GM made a benefit guarantee agreement with the UAW back in 1999 when Delphi was spun off of GM, that if Delphi for any reason could not meet their pension and retirement benefit obligations to UAW workers GM would pick them up. That guarantee was reiterated as part of the memorandum of understanding that the UAW, Delphi, and GM reached as part of the restructuring of Delphi after its 2007 bankruptcy. When I said they had a contract I meant it.

Yes, but that contract could have been voided in Bankruptcy.

[MikeM]

Is it the intent of the bankruptcy courts to keep contracts or make parties whole as much as feasible? What was the nature of the salaried employees pension plan? Was there any sort of contract establishing their pension or was it provided through the generosity of the company? Or was it a "me too" thing: the UAW has it so we want it too? Did the salaried employees have any other benefits [[401k) that they retained or lost?

[EastsideAl]

One of the primary purposes of bankruptcy court is to meet obligations and pay off creditors inso far as it is possible to do so. It is not true that contracts automatically become null and void in a bankruptcy proceeding - they just line up with other claims against the company in question and are examined by the court in light of the circumstances of that particular case.

In this case, this obligation of GM's was part of a court-approved agreement reached as part of a previous bankruptcy proceeding - Delphi's bankruptcy - so it was very unlikely that GM was going to be able to escape the terms of that agreement. Even the PBGC had stated that they were expecting GM to meet their obligations under that agreement. If GM had refused to pay, the UAW certainly would have gone to court to enforce the agreement. The new GM management is responsible for that agreement, as it has been for other agreements with the UAW that were reached by GM previously. In this case, they reached a settlement to only "top up" the pensions, not pay the entire thing as a they were obligated to do under the agreement with the Delphi bargaining unit, thereby saving the company some money.

Other than the plight of the white collar workers, who are understandably upset but were not covered in under the original agreement between the UAW, Delphi, and GM anyway, since they are not unionized and were not part of the same pension pool. I'm not sure what the problem is here. It seems like a win-win for all involved.

[MikeM]

The problem appears to be that a double standard exists, by either the PBGC or the bankruptcy court. But that's the question: is there a double standard or does it just appear that way?

[EastsideAl]

There is no double standard. The UAW workers had a signed agreement with GM that was reached originally as part of the terms of their agreeing to be spun off by GM, with whom they had a contract, to another employer - Delphi - that was a former subsidiary of their former employer. That agreement guaranteed GM's payment of their pensions in case Delphi was unable to pay [[the guarantee agreement was made necessary because Delphi did not fully fund their pension plan when they were spun off). The terms of this pension guarantee were then explicitly incorporated into a contract reached as part of a federal bankruptcy proceeding several years later.

The Delphi white collar workers are not part of the UAW bargaining unit, are not union members or unionized employees, and were never covered under the contract. They had their own pension plan. So, there is not a double standard at work here, but two different standards. As there almost always are for hourly and salaried employees of any company or organization.

[MikeM]

So you're saying Noggin's claim of favoritism is bunk? What looks like administration favoritism is really the legal system operating normally?

[EastsideAl]

Yes, that's what I'm saying.

[Det_ard]

I'm not so sure that things were handled "normally" in the GM bankruptcy. While the union and the company did indeed have a contract, contracts get broken in bankruptcy. In GM's bankruptcy case many aspects of the union contracts were preserved, yet the secured bondholders' claims, which normally come first, were dismissed. Call me cynical, but I don't think it hurt that the union helped get Pres. Obama elected.