About $6.2 billion in pension liabilities of bankrupt auto parts maker Delphi will be assumed by the Pension Benefit Guaranty Corporation (PBGC), an independent US government agency tasked with protecting private pension plans. Delphi is the largest parts supplier for General Motors, which emerged from bankruptcy on June 20.
The move... clears the path for “the new GM” to absorb some profitable parts of Delphi, while shifting the pension obligations owed to roughly 70,000 retirees onto the PBGC...Over the past decade, Delphi has encouraged its employees to take early retirement. Now, many of these retired workers will lose between a third and a half of their monthly pension payments.
Delphi’s decade-long “independence” from its parent company, GM, is a chronicle of the attack on the jobs and conditions of auto workers. Delphi was spun-off from GM, becoming a publicly-traded corporation in 1999, but it remained dependent upon sales to the largest US automaker. The real purpose of its creation was to prepare for a new round of layoffs at both GM and Delphi, and to shift pension obligations from the former to the latter. Indeed, the nominally independent parts makers, including American Axle, have served Wall Street as the first target in the lowering of wages and benefits for the whole industry.
The importance of the 2005 bankruptcy of Delphi cannot be underestimated. One of the largest bankruptcies of an industrial corporations in US history to that point, it set the stage for the sweeping rollbacks imposed on Big Three auto workers in 2007—in which the companies dumped their retiree health care obligations—and this year's bankruptcies of GM and Chrysler.
As Delphi entered bankruptcy, Delphi CEO Robert S. Miller explained that the action was needed in order to eliminate “legacy” costs—the contractual costs of providing pensions and health care to retired workers. Miller predicted that this would be necessary for the industry as a whole. He complained of the “social contract” that prevailed in industries like auto “to elevate their workforces with elaborate defined-benefit retirement programs.” That was all well and good “back in the days when you worked for one employer till age 65 and then died at age 70,” he said.
However, “People are living longer these days,” Miller continued. “And medical science is rapidly expanding the capability to spend vast amounts of money keeping you alive for decades...the question is, how can we afford it?”
...The attack on the pensions of retired auto workers which began at Delphi, was only an early phase in a far broader attack on the living conditions of retired workers...This will be followed, sooner rather than later, with an assault on Social Security.
The essence of the matter is this: the American ruling class no longer accepts the proposition that workers are entitled to healthy, decent, and long retirements. This, it has been concluded, is simply “too expensive.”
http://www.wsws.org/articles/2009/jul2009/delp-j24.shtml
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