Motown Mechanic; Steve Miller Has Returned to Detroit to Repair a Wreck at Delphi. Will American Industry Ever Be the Same?

By Naughton, Keith | Newsweek, October 24, 2005 | Go to article overview

Motown Mechanic; Steve Miller Has Returned to Detroit to Repair a Wreck at Delphi. Will American Industry Ever Be the Same?


Naughton, Keith, Newsweek


Byline: Keith Naughton

Steve Miller, CEO of newly bankrupt Delphi Corp., has always known how to cut the tension in difficult situations. As a young Chrysler exec during its 1980 federal-bailout talks, he once pulled out a toy pistol at a bankers' meeting and held it to his head, saying: "If you guys can't agree on this stuff, I'm going to have to kill myself." Last month, with Delphi in feverish (and ultimately fruitless) negotiations for a bailout from General Motors, Miller found himself beside GM CEO Rick Wagoner at an executive confab in Washington. Miller's BlackBerry buzzed. It was a flaming e-mail from an employee. "You are a rapist and a pillager and a thief of the working man's rights," it read, "and may you rot in hell." Miller showed it to Wagoner, saying: "Hey, Rick, this one's for you."

His gallows humor aside, what Miller is engineering is no laughing matter. Since he arrived this summer to save Delphi, the feared and revered corporate fireman is loudly proclaiming an uncomfortable truth: Detroit, the last bastion of blue-collar affluence, is collapsing under the weight of pension and health-care costs. That's what drove Delphi into Chapter 11 this month, the largest industrial bankruptcy ever. Spun off from GM in 1999, America's largest car-parts maker is losing billions because its average of $65 in hourly labor costs is at least three times as high as its domestic rivals'. Not to mention the flood of cheap offshore car parts that will likely lead Miller to close several factories making commodity parts. "Paying $65 an hour for someone mowing the lawn at one of our plants," says Miller, "is just not going to cut it." Delphi's bankruptcy, Miller warns, could become the tipping point for not just the fall of Detroit but for all of industrial America. In a global economy, Miller argues, American business can no longer afford labor contracts that require it to "burn the furniture" to feed ever-growing pension and health-care obligations. "What's happening at Delphi is just a small part of a huge national problem," he says. "This is our country's dilemma as we talk about Medicare and Social Security."

The straight-talking 63-year-old has been down this road before. He took Bethlehem Steel into bankruptcy in 2001, vaporizing its workers' pensions in the process, and he sat on United Airlines' board when it went Chapter 11 a year later. …

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