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THE WORKERS: Take a 63% cut in pay? First reaction is anger

THE WORKERS: Take a 63% cut in pay? First reaction is anger
October 8, 2005
BY JASON ROBERSON and JOE GUY COLLIER
FREE PRESS BUSINESS WRITERS

Delphi Corp. union workers across the country grappled Friday with how they would make ends meet if their employer, the nation's largest auto parts supplier, followed through on pay cuts of up to 63% to reduce costs and avoid filing for bankruptcy.

A 56-year-old Lockport, N.Y., man is considering hitting the open road again, driving a truck. A 70-year-old Livonia wife of a retired Delphi worker questions whether she'll be able to emotionally support her husband. A 55-year-old Flint worker and mother of a 13-year-old confessed she has no Plan B if her wages are cut.

Union flyers surfaced Thursday saying Delphi has demanded as much as a 63% wage cut, to $10 an hour, and for workers to pay 27% of their health-care costs, versus 7% currently. Pensions could be halved. Delphi has said it will have to file for bankruptcy protection by Oct. 17 if it doesn't get concessions from its unions and financial assistance from its former parent company, General Motors Corp.

Making matters worse, Friday's news of increased severance packages for Delphi's top 21 executives, whose pay is as much as $1 million a year, caused workers like Randy Burley, 56, of Lockport, N.Y. to curse.

"And people complain we make too much money," said Burley, whose plant in Lockport makes radiators. "Well listen, we get paid for the (expletive) we have to put up with."

Burley, a former truck driver who turned in his keys five years ago for a more stable job at Delphi, said if Delphi makes the proposed cuts he would "dust off the license and get back on the road."

Alice Wheeler, 55, a 32-year Delphi employee with a 13-year-old son, said her family is heavily dependent on her income.

Wheeler called the proposed cuts "scary, very scary," adding that she is willing to bend on vacation days and health plan co-pays, but "leave my money and my pension alone."

Retirement at risk

Judith Konarski, 70, has endured her husband's Delphi work-related stories for 35 years. Richard Konarski, 72, brought home rumors of layoffs, cutbacks and management struggles before retiring in the mid-1980s. At the time, Delphi was still part of GM.

"We're interested in all of this because we figure eventually they are going to come down on retirees," she said.

Janine Krasicky, 37, of Ferndale knows firsthand the anxiety of the Delphi workers. She was laid off twice, first in 2001 and then in 2003, from companies that made robots for the manufacturing industry. The second layoff cost her a $70,000-a-year marketing job.

The experience was unsettling, Krasicky said. The government paid her a small monthly unemployment check and she picked up a few projects for additional income. After the first layoff, she also started cutting back on expenses.

"When something like that happens to you, you realize how much frivolous time is spent shopping and buying lattes," Krasicky said.

After about six months of interviewing for jobs, including positions at Delphi, she decided to start her own marketing and public relations firm, J9 Media Solutions LLC, where she's now making more than she did before the layoff.

Displaced workers have to be creative in piecing together a career, Krasicky said.

"You really should look to do what you love to do," Krasicky said. "You can't harbor too much ill will. It's not going to do you any good. You have to move forward."

At McLouth Steel in Trenton in the 1980s, workers took pay cuts of 35% or more during the 1980s.

And 55-year-old Cleofus Wilson, known as Blue by his friends, remembers trying to juggle his family's bills.

"It was a rough situation," Wilson said. He cut back wherever he could.

"You didn't travel as much. You didn't go on vacations," said Wilson, who was a union representative for the United Steelworkers Local 2659. He left McLouth after a disability in 1990. McLouth closed in 1996.

If Delphi gets such drastic cuts, he said, workers will definitely need to control their costs.

"It'll be one of the tightest budgets you ever put yourself on," Wilson said.

An emergency plan

Financial advisers and counselors say planning and determination can get people through a tough spot.

Ideally, workers should have enough money to cover three to six months of expenses. If they don't, they might have to take some unconventional measures to get by.

The tried-and-true financial advice is never to borrow from a 401(k) plan and to keep setting aside money for retirement. But what do you do if you're suddenly taking home a Wendy's-size paycheck after years of making GM-size wages?

Reality check: If it comes to deciding between contributing to the 401(k) or paying the mortgage, you'd better opt to pay that mortgage and take money out of the 401(k), even if it means paying a tax penalty.

"If people need to suspend contributing to their 401(k), that's understandable," said David Kudla, chief executive and investment strategist for Mainstay Capital Management in Grand Blanc, which advises Delphi workers and others on their 401(k) plans.

"At the end of the day, you've got to do what you've got to do."

Tom Hakim, with Hakim Financial Inc. in Mt. Clemens, agreed that tapping a 401(k) is a last resort but might be necessary during a layoff or drastic wage cut.

What's important is getting past the initial anger at the company, Hakim said. Don't make decisions until you have a clear head, he said.

"Go though the emotions," he said. "Be mad at your boss and everyone on the planet and then step out of the fishbowl. Let's sit down and make a plan."

If people take action, they will get through the difficulties, said Wendy Karougian-Moore, a psychotherapist with the Westside Counseling Center in Southfield.

The financial problems will cause stress in the family, she said. People should talk about the problems and seek therapy if the stress gets overwhelming, Karougian-Moore said.

They should expect to spend six to eight months looking for another job, but shouldn't get discouraged, she said. Keep interviewing. Consider other careers or educational opportunities to do something different.

"It's tough but you have to have faith," Karougian-Moore said. "It's really important for people to know that this is not going to be forever."

Contact JASON ROBERSON at 313-222-8763 or [e-mail]. Free Press business writer Susan Tompor contributed to this report.


LINK: http://www.freep.com/money/autonews/delphi8e_20051008.htm