The City of Detroit Water and Sewerage Department Wastewater Treatment Plant on Jefferson. (The Detroit News)
Detroit — The Detroit Water and Sewerage Department plans to shed 40 percent of its staff — about 700 jobs — over the next several months, The Detroit News has learned.
This week, 600 non-union workers began receiving letters informing them that their jobs have been reclassified and inviting them to apply for new positions within 30 days. Unions will be briefed Friday on the downsizing that is expected to reduce the 1,700-member department to about 1,000 jobs by year’s end.
The plan has been in the works since 2012 and could save upwards of $20 million a year, said a source with firsthand knowledge of the plan. It’s being rolled out amid talks with suburban officials to form aregional authority to run the department in exchange for annual lease payments. The department serves 4 million customers and is viewed as one of Detroit’s best assets amid bankruptcy proceedings over the city’s $18 billion in long-term debt.
Water officials declined comment, as did Emergency Manager Kevyn Orr. His spokesman, Bill Nowling, wrote in an email that Orr is “aware of the plan” but can’t discuss it because of “ongoing discussions with the counties regarding the future of the DWSD.”
Union officials said the plan puts the system at risk — and workers have few options besides a strike because of bankruptcy and the voiding of contracts by a federal judge, said Michael Mulholland, vice president of AFSCME Local 207 that represents 950 water workers.
“They’ve sealed up all legal avenues for unions to fight for members and the community they serve,” he said. “Only strike action is what we have left to convince management they’ve plowed too deep and struck a rock.
“This whole city is a tinderbox,” he added. “It’s a little damp right now. But people will be surprised when something happens in this town. They can’t keep attacking the working class, cutting benefits, wages and jobs.”
The union had a five-day strike in 2012 over seniority and other issues.
Those briefed on the plan said it could save money to invest in long-needed infrastructure and stabilize rates. For years, annual rates have increased by double digits, but they slowed to an average 4 percent to suburban communities this year.
Better pay, fewer benefits
Under downsizing, the department expects no change in service and hopes streamlining operations will improve its bond rating, making it less expensive to borrow money for improvements, said a source who has seen the plan.
The reorganization plan calls for many of the new jobs to pay better than current ones but include fewer benefits, the source said.
Employees who aren’t rehired won’t receive a severance or other compensation. Those with 10 years of service are vested in the pension system, but newer employees would be out of luck, Mulholland said.
Some employees met Tuesday with management and were told they would receive self-assessment letters to list their qualifications and explain how they could fit in the reorganized department, said Susan Ryan, a senior sewage plant operator and AFSCME 207 officer.
She argued 1,000 employees aren’t enough to effectively run a department that serves more than 120 communities over 1,000 square miles.
“I’m concerned they’re going to be lowering the quality of what we do and that we won’t have the resources to do what we need to do,” she said.
Union employees who don’t meet qualifications for new jobs would likely be placed in a special projects pool of workers who fix leaky pipes, The News has learned.
It’s uncertain how long those jobs would last, and Mulholland said they are the first to be let go.
While substantial, the cuts are less dramatic than those recommended in 2012 by a consultant hired by the department. The Minnesota firm, EMA, recommended laying off four of every five employees to winnow the staff to 374.
Its report concluded the department had far too many job classifications, more than 250, and wanted to cut that number to 31.
The report found the average employee cost, including benefits, was more than $86,000.
Reductions in staff
Gertrude White, a $13-an-hour security officer, said workers have known for months that massive cuts are coming. The department has half as many workers as it did 30 years ago, and has lost 300 employees to attrition since 2012.
White retired in October after a knee surgery rather than try to return to a job she might lose.
“Anyone who has their time in is leaving like crazy,” White said. “It’s wrong they have been cutting so much. We weren’t the cause of the problem. We were the solution.”
The downsizing plan, known as optimization, was ordered by U.S. District Judge Sean Cox, one of two judges who oversaw the system for 36 years because of a pollution lawsuit from the 1970s.
He transferred control back to the city last March, the same month Orr became emergency manager. In his final order, Cox rejected a bid to create a regional authority — saying he lacked the authority to do so — but the idea has resurrected amid the city’s bankruptcy.
Regionalization talks have been ongoing for six months. Oakland County deputy executive Robert Daddow said he was aware of long-range plans to shrink the department but hasn’t “heard a single word or received a single email” that they are imminent.
“If it’s occurring, it’s a good thing,” he said. “Why wouldn’t you restructure to try to improve operations? That’s called management.”
Under the regional authority plan, Wayne, Oakland and Macomb counties would contribute money in exchange for a greater say in governance. Orr had hoped to reach an agreement before the end of last year, but suburban leaders shot down a proposal to pay the city $9 billion over 40 years.
The suburbs also nixed a plan to pay $70 million year year.
The most recent plan called for them to pay about $47 million per year.
Future raises questions
Macomb County Executive Mark Hackel said he met with Orr on Tuesday, but questions remain about funding as well as the department’s needed infrastructure improvements and pension obligations.
Hackel said he supports the creation of an authority because it would give suburbs more power to make decisions in the department.
Some 75 percent of its customers live in the suburbs.
Plans for the water department are expected to be included in a plan of adjustment Orr must file with the bankruptcy court by March 1 showing how the city expects to raise money and shed debts.
Hackel said questions still need to be answered.
“We’re in no hurry to get a deal done because we don’t want to go getting into something blindly,” Hackel said Tuesday.