2) An article titled "Why Delphi's Asia Operations are Booming:" "He (Choon T. Chon, Delphi's VP of Asian Pacific Operations) has been explaining the bankruptcy filing of the U.S. operations to his staff and customers by likening Delphi's Asian operations to the children of a sick American mother. "Our mother has a tumor. This tumor is the UAW," he says, referring to the powerful United Auto Workers union that represents 25,000 Delphi workers and 10,000 retirees...."We know hat she's going to come out of the hospital very well," he says, referring to the U.S. company's Chapter 11 status.

Jason E: You're a UAW member...with all due respect, you're sorta biased...eh?
Your union is realizing too late that $65/hr all in is asinine...period.

$65/hr (including health and retirement benefits)"

The Oracle of Delphi
Steve Miller's vision of the post-bourgeois workforce.
By Daniel Gross
Posted Tuesday, Oct. 11, 2005, at 12:02 PM PT


On Saturday, Delphi, the giant auto-parts company, filed for bankruptcy, kicking off what is sure to be one of the great cram-downs in American history. In a series of interviews with the New York Times, the Wall Street Journal, and the Financial Times, Delphi CEO Steve Miller offered unionized workers a choice: They can accept pay cuts of about two-thirds or face the termination of their pension plan, which is underfunded by several billion dollars.

Miller, whom no one will confuse with the Gangster of Love, has performed similar drills at bankrupt industrial companies like Bethlehem Steel, Morrison-Knudson, and Federal-Mogul. And the experience has given him some insight into the forces transforming the industrial world, leading Micheline Maynard of the New York Times to dub him the "Oracle of Delphi." As he told the Financial Times, "Delphi is simply a flashpoint, a test case, for all the economic and social trends that are on a collision course in our country and around the globe."

When he ruminates on the dialectics of global capitalism, Miller calls to mind a famous, simplistic big thinker with prominent facial hair. No, not Tom Friedman—Karl Marx. Because what Miller is talking about—and the effort he's been engaged in at companies in the steel and auto industries—is the re-proletarianization of industrial work.


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Transforming masses of unskilled, insecure industrial workers into middle-class stakeholders was a key achievement of the U.S. economy in the 20th century. Henry Ford introduced the $5 day in 1914 as part of a larger effort to make his hourly workers—many of them immigrants and minorities—think and behave more like respectable middle-class Protestants. In the following decade, the spreading belief that better-cared-for workers would prove less susceptible to unionism, socialism, and communism led to the advent of welfare capitalism. Through the New Deal and the Cold War, the grand bargain between government, industry, and labor held fast. With pensions and paid vacations, factory work became a ticket to the middle class, providing home-ownership and comfort, job and retirement security, health care, and leisure. (Where I grew up—in mid-Michigan in the 1970s—it was not uncommon to find Oldsmobile workers playing golf at public courses.)

In recent decades, however, this grand bargain has collapsed slowly—and in the case of Delphi, all at once. There's plenty of blame to go around: clueless managers, atavistic unions, and indifferent politicians. Broadly speaking, the United States has collectively decided that certain industries, like electronics, are not worth keeping. Other industries, like meatpacking and chicken-processing, are worth keeping, but only if they're staffed by a new proletariat—immigrants who labor for low hourly wages and without benefits or union representation. And now we're being told that other industries like steel, coal, textiles, and auto parts can survive only to the extent that middle-class stakeholders choose to become insecure industrial workers.

To be sure, Miller is right that broad forces like globalization, free trade, and the emergence of China as an economic power are making life difficult for U.S. manufacturers. But many of the wounds are self-inflicted. And our system has some perverse incentives that encourage smart executives like Miller to restructure at the expense of workers.
Once Miller arrived on the scene in July, it was clear that he was going to drive Delphi straight into Chapter 11. He had little in the way of stock, and his reputation wouldn't take a hit if Delphi failed. Taking companies in and out of bankruptcy is what he does for a living! What's more, Delphi, which was spun off from General Motors in 1999, faced intractable structural problems. GM essentially spun Delphi off so it could get auto parts for less than it costs to make them. And when raw-material costs spiked, Delphi couldn't pass on its higher costs to its main customer. So, Miller didn't try that hard to restructure outside of bankruptcy. According to the Wall Street Journal, Miller's last offer to the United Auto Workers union was a 75 percent wage cut. (In Delphi's defense, the $65-per-hour compensation it had negotiated with its UAW workers was clearly unsustainable.)
The beauty of Chapter 11 is that it allows companies to walk away from so many obligations to lenders and employees. If the UAW doesn't come across, Miller can ask the court to impose salary changes. Or he can toy with the notion of kicking the underfunded pension onto the increasingly feeble shoulders of the Pension Benefit Guaranty Corp., which Miller did at Bethlehem Steel in 2002. Delphi says it may be able to save the pension plan, but only if workers accept a two-thirds pay cut—wages and benefits of $20 per hour.

Now, $160 per day in wages and benefits isn't bad. That comes to about $41,600 per year. But is it enough to sustain a bourgeois lifestyle? Henry Ford instituted the $5 day because he wanted his employees to buy his cars. Back out $10,000 for benefits and insurance, and Delphi's employees may make enough to buy a 2006 Buick Terraza. But they won't have anything left over.

The United States isn't de-industrializing. Rather, many of its historic industries are getting smaller, and the jobs they offer are declining in quality. The scary thing is that this re-proletarianization of industrial work is moving up the value chain, from raw industrial materials (steel, coal) to components (auto-parts makers and textiles). Where's it going next? Higher up the value chain to the companies that make the finished products. For the Oracle of Delphi has warned that if Ford and General Motors don't heed his message, they could be next. "I am very concerned about what happens to the Big Three," he said. Miller shouldn't be too concerned, though. GM or Ford could be his next gig.

Tech's Phony Dollar-a-Year Men
How CEOs make millions by eliminating their own salaries.
By Daniel Gross
Posted Thursday, Jan. 30, 2003, at 12:06 PM PT



Since the tech bubble burst in 2000, leading chief executive officers including Cisco's John Chambers, Siebel Systems' Thomas Siebel, and Oracle's Larry Ellison have either eliminated their six-figure salaries or reduced them to $1.

The moves seem both practical and highly symbolic. In theory, the savings help the company preserve jobs, and the CEO shows himself to be unselfishly devoted to the company, willing to bet it all on recovery. The $1 salary especially resonates now that the nation mobilizes for war. After all, the original "dollar-a-year" men were the corporate executives who quit the private sector to help the government during World War II.

But today's dollar-a-year men are practicing phony virtue. In the '40s, salaries accounted for a hefty percentage of executive compensation, and hence directly influenced the ability of a CEO to get rich. Today, the salary of a CEO is a mere pittance compared to his earnings. Many of the bosses who have forsworn their salaries are still lapping up other forms of compensation—such as options and bonuses—that divert far greater company resources. As cost-cutting, these salary cuts are preposterous. It is like a fat person who devours two pizzas a day forgoing the mushroom topping to cut calories.

In 1941, as war planning began, high-ranking executives flocked from the private sector to Washington, essentially volunteering to work for entities like the Office of Production Management and the Office of Price Administration. In a time of national conscription, Victory Gardens, and Rosie the Riveter, executives were expected to pitch in their expertise and time. The dollar-a-year men included GE CEO Philip Reed, Sears executive Donald Nelson, Ford production chief Ernest Kanzler, and General Motors President William S. Knudsen. By helping to transform the U.S. consumer economy into the "arsenal of democracy," these executives—and hundreds of others—contributed significantly to victory.


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In recent decades, dollar-a-year executives have been found almost exclusively in the private sector, particularly at ailing companies that, like the United States in the '40s, were involved in life-or-death struggles against powerful, putatively evil forces. In 1978, when Lee Iacocca assumed the helm of Chrysler, which was fighting for survival—partially against Japanese imports—he took a $1 annual salary. In 1997, when Netscape's future suddenly seemed in doubt as technology's Evil Empire—Microsoft—began to challenge its business, chief executive James Barksdale cut his annual salary from $100,000 to $1. Between 1999 and 2001, when Apple's Steve Jobs returned to rally his wounded warriors against the Microsoft-Intel-IBM monolith, he took a total of $3 in salary.

Jobs and Barksdale represent the new breed of dollar-a-year men: company founders with hundreds of millions of shares of stock leading their suddenly cash-strapped organizations through tough times. By refusing a salary, they were essentially volunteering to nurse their babies back to health. In theory, they would only gain if the stock price rose.

In practice, it's a different story. The World War II dollar-a-year men sacrificed real wealth for the good of the nation. Today's dollar-a-year men are sacrificing nothing. In part because of the way the tax code penalizes companies for paying salaries of more than $1 million, cash has shrunk as a share of overall compensation. In effect, the dollar-a-year CEOs simply traded small amounts of cash for massive amounts of options. As part of a four-year, no-salary agreement he reached with Oracle in 2000, CEO Larry Ellison—who already owned about a billion Oracle shares—received options on another 40 million. Cisco's John Chambers cut his salary from $268,131 in 2001 to $1 in 2002, but took 4 million options, half of which are exercisable at an eminently reachable $16.01.

Reducing a six-figure salary to a buck is a good tactic for billionaires who know they're about to cause real pain to others. New York Mayor Michael Bloomberg's status as a dollar-a-year man has partially insulated him from charges of insensitivity as he has raised property taxes and cut social programs to close budget gaps.

But the tactic has less utility in the private sector, especially when the dollar-a-year men aren't really depriving themselves. In 2001, when Tom Siebel slashed his salary from $1 million to $1, he exercised options on more than 3 million shares, earning more than $174 million. The cost of those options to shareholders vastly exceeded any savings from his salary cut. Economically speaking, a dollar is a dollar to shareholders, whether it comes in the form of a salary, a bonus, or an option. Or in the form of a $90 million jet. In 1999, Apple gave Steve Jobs what the company called a "special executive bonus": a plane "with a total cost to the Company of approximately $90,000,000." Apple shareholders would have been better off if Jobs were paid a huge salary instead.

Nobody will ever accuse this generation of executives of self-sacrifice. Indeed, as a class, today's CEOs have excelled at insulating themselves from risk and hardship while inflicting it on their underlings and their putative bosses, the shareholders. The only hair shirts these dollar-a-year men are wearing are made of cashmere.