Tough-talking Miller's latest target: Delphi

As CEO, he asks bankruptcy judge to void labor pacts

unions threaten to strike

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April 04, 2006|By KURT BLUMENAU | KURT BLUMENAU,THE (ALLENTOWN, PA.) MORNING CALL

Robert S. Miller is no stranger to unpopular decisions.

As the last chief executive officer of Bethlehem Steel Corp., Miller moved in 2003 to cut off health care insurance to about 95,000 retirees and their dependents, saying the company could no longer afford billions of dollars in costs. Also, the federal government took over the company's underfunded pension plan, leading to pension cuts for some workers who had retired early.

Now Miller is taking a tough stand as CEO of Delphi Corp., the auto parts maker, which asked a federal bankruptcy judge Friday to void its union contracts. The bankrupt company claims high costs of wages and benefits prevent it from competing.

Miller's moves in Bethlehem, Pa., were partially successful at best. Bethlehem Steel's mill at Sparrows Point in Baltimore County and another in Indiana stayed open, but the company lost its independence, selling out to International Steel Group. And blue-collar retirees continue to struggle with health care costs.

Friday's announcement could have even bigger stakes: Delphi's unions have threatened to strike, which could not only cripple Delphi but drag General Motors Corp., its largest customer, toward bankruptcy.

"I think we're looking at high-risk gambling at this point," said Mary Deily, an associate professor of economics at Lehigh University in Bethlehem, who studies industries going through shakeouts. "It's really not a good situation."

Miller was not available for comment. In a written statement, he defended his latest requests as tough medicine for a troubled company - the same justification he used for his moves at Bethlehem Steel.

"Emergence from the Chapter 11 process in the U.S. requires that we make difficult, but necessary, decisions," he said in the statement.

"We are mindful of the impact this plan will have on some of our stakeholders, including our employees and communities," he added. "Yet ultimately, these actions will result in a stronger company with future global growth opportunities."

Delphi's unions, including the powerful United Auto Workers, are not buying in. Union leaders accused Miller of abusing the bankruptcy process to escape the company's commitments to its workers.

Yesterday, about 50 people protested outside the building in which Miller spoke to the Detroit Economic Club. They carried signs and chanted slogans like "Steve Miller/Dream killer" and "Not one dollar, not one dime/Cutting wages is a crime."

"It's a sad day for the Delphi workers that our plants are being closed," said Jonell Sayles, 53, who has worked at a Delphi plant in Flint for 30 years. "We're out here today to send a message to the world and our co-workers that somebody is trying to make a difference."

Friday's announcement could sow the seeds of an acrimonious break with those unions, if Bethlehem Steel is any precedent.

Jerry Green, president of Bethlehem's Local 2599 of the United Steelworkers of America, said the cuts made by Miller remain "a bitter pill" to retirees stripped of their benefits.

"He accomplished nothing - him and the rest of his cohorts," Green said.

In an interview last year, Miller said he was proud to have kept the plants open, but regretted not being able to do more for retirees.

"When I left town, I had very mixed emotions," he said.

Another turnaround job proved more successful for Miller. He helped arrange the federal bailout in 1979-80 that saved Chrysler Corp., now DaimlerChrysler.

The next few months will tell whether Miller's bid to rescue Delphi fares as well. U.S. Judge Robert Drain has scheduled a hearing on Delphi's request next month and will decide after that whether to void the labor contracts.

Miller's request is not unprecedented, Lehigh's Deily said. Financially struggling Delta Air Lines and Northwest Air Lines both raised the idea of voiding pilots' union contracts last year.

"I don't think it's a good sign," Deily added. "It means they couldn't somehow agree to do something in a negotiated way."

Kurt Blumenau writes for The (Allentown, Pa.) Morning Call. The Associated Press contributed to this article.

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