From Automotive News
WASHINGTON — Delphi Corp.’s bankruptcy “is a metaphor for nearly every economic and social issue gripping American manufacturing,” says CEO Steve Miller.
Miller told reporters here late last month that Delphi’s problems symbolize more than the immediate financial troubles of U.S. automotive suppliers. The company’s bankruptcy forecasts a “coming intergenerational conflict,” he said.
“Young people increasingly resent having their wages reduced and taxed away to support social programs” for their grandparents, Miller said.
Government must help, he argued, by overhauling pension law, reforming health care and rewriting the tax code. Miller said he has been making that case directly to public officials.
Meanwhile, he said, Delphi workers must deal with the conflict soon. As the company attempts to reorganize in bankruptcy, unionized workers will have to decide on trade-offs between their own wages and retirees’ health and pension benefits, Miller said.
The conflict also will surface when the Big 3 negotiate new contracts with the UAW in 2007, Miller predicted.
Miller says pension law changes that Congress is considering are not adequate. He agrees that rules should be tightened to require employers to fund retirement plans fully.
But the government agency that insures private pensions must have the flexibility to make arrangements that consider companies’ special circumstances, Miller says. Instead, he complains, the Pension Benefit Guaranty Corp. “has only the ‘nuclear option’ of plan termination.”
“We are witnessing the slow, agonizing death of defined benefits as industrial compensation policy,” he says.
Miller says problems with health care are even worse. He promises to offer a comprehensive plan in several months.
“Clearly, it is time to consider bold proposals,” he says.
The nation also needs basic changes in tax law, Miller says. U.S. companies operate under a system that taxes production, he says. Their overseas-based competitors enjoy the benefits of systems that tax consumption primarily, Miller says.
U.S. companies must build the taxes into their vehicle prices. That puts them at a disadvantage in their home market and where they seek to sell exports, he argues.
The prospects for Miller’s agenda in Washington are clouded. Congress and the Bush administration generally have discussed incremental changes in health care policy. President Bush’s tax reform commission produced a plan last week that did not resemble Miller’s ideas.
Still, Miller says: “These are huge problems that also present huge opportunities to at last confront our economic problems straight on and deal with them.”
2005 Automotive News. All Rights Reserved.
_______________________________________
