General Motors Co. is preparing to sell itself to investors in one of the nation's largest initial public offerings, but ghosts of a politicized past may haunt its future.
From abandoned assembly plants and strained relationships with dealers to thousands of Delphi Corp. retirees left with unfairly eviscerated pensions, mistakes made during GM's race through bankruptcy last year loom as potential obstacles -- and prove that the Masters of the Universe sometimes get things badly wrong.
Idled industrial hulks, difficult to peddle in the recession-gutting commercial real estate market, weigh on their communities for now. Many GM dealers dumped unceremoniously are getting their stores back, corporate recognition of two simple things: that they got it wrong the first time and, second, that more successful dealers plus solid cars and trucks equal incremental sales gains.
But Delphi's 20,000 salaried retirees -- mostly clustered in Michigan and neighboring states -- are still awaiting a credible explanation about why some of them lost as much as 70 percent of their pensions while their unionized counterparts were made whole in last-minute deals intended to help GM and Delphi, the former GM parts unit spun off in 1999, exit bankruptcy.
There is no credible explanation beyond the obvious: GM's paymasters at the Treasury Department used taxpayer money to favor GM's United Auto Workers members and their Delphi comrades over Delphi's salaried employees, many of whom spent the bulk of their careers working for GM.
The disparity is stunning, as an energized Delphi Salaried Retirees Association is more than happy to illustrate. They have charts. They have union support and bipartisan support in Congress, albeit after the fact. They have a federal lawsuit, scheduled for a hearing in Detroit on Sept. 24.
And they have expert opinions from two of the nation's leading actuarial firms -- Towers Watson and Wells Fargo's BPS&M -- suggesting the Delphi retirees got the shaft because it was politically expedient, not because the pension fund was too underfunded to meet future obligations.
When the Delphi-GM-Treasury work-out dumped Delphi's salaried pension plan on the quasi-governmental Pension Benefit Guaranty Corp. in the summer of 2009, the plan was 85 percent funded. Remember that number and the fact that the PBGC's board of directors includes Treasury Secretary Tim Geithner.
At the end of 2008, according to numbers assembled for the Delphi salaried retirees by BPS&M, the salaried pension plans of several of Delphi's fellow suppliers were more underfunded. Magna International? 81.8 percent. TRW? 77.9 percent. Borg-Warner? 75.9 percent. Federal-Mogul, which emerged from Chapter 11 bankruptcy with its salaried plan intact? 62.1 percent funded.
"This has never been about the money," says Den Black, a retired engineer and president of Delphi's salaried retirees group. "This is all about the determination to be discriminatory on the part of the (Obama) administration."
Not so, say the political appointees, who then employ the "contractual obligations to the union" dodge and dispute exactly how well funded the Delphi plan actually is. Actuaries (and a federal court) can sort that out.
The more pressing point, as Neil Barofsky, special inspector general for Treasury's Troubled Asset Relief Program, told Rep. Chris Lee, D-NY, in a letter last week is determining "whether officials ... pressured New GM to 'top-up' Delphi hourly retiree pension plans" and "whether political consideration played a role in favoring hourly over salaried retirees."
I'll help, Mr. Barofsky. The answer is yes, because the UAW and its members are powerful Democratic allies in Michigan and the Midwest. Because the International Union of Electrical Workers, initially denied the top-up treatment engineered by the Treasury and its auto task force, is politically connected in bellwether Ohio.
But the Delphi salaried retirees, many of whom are lower-level working people who have seldom seen an executive suite much less deposited bonus checks in their bank accounts? They don't represent a constituency that matters politically -- to pols in Washington or the corporate types who have to contend with union blowback (like GM CEO Dan Akerson) but can pretty much ignore the rest.
That's understandable, in a Machiavellian sort of way. It just happens to be wrong, morally indefensible and, if the Delphi retirees are proven right, a position that isn't backed up by the facts or the law.
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