Companies are discarding traditional pensions

A sad commentary on America's retirees


Published on Friday, December 30, 2005 by the Los Angeles Times

How Bedrock Promises Of Security Have Fractured Across America
Companies are discarding traditional pensions -- or making government foot the bill. Delphi workers struggle with the changing landscape.

by Peter G. Gosselin

For more than two decades, Lowell Seibert made a living driving piles and erecting machinery across the industrial Midwest.

But with mortgage payments, college tuitions and the prospect of retirement looming, Seibert traded in his outdoor job 14 years ago and went to work for the Packard Electric division of auto parts giant Delphi Corp. He was offered $19 an hour (now $30), good benefits and, perhaps most important, the promise of a solid pension and old-age health insurance.

"Heavy construction is a rush," he said of his old position, "but Packard was a sure thing."

Or so it seemed until Oct. 8.

That's when Delphi Chief Executive Robert S. "Steve" Miller, citing global competition and crippling "legacy costs," ushered the $28.6 billion-a-year company into one of the largest industrial bankruptcies in U.S. history. In short order, Miller called for slashing workers' compensation by almost two-thirds, threatened to void the company's union contracts, and hinted broadly that he would follow the playbook he had used elsewhere of pushing responsibility for paying the firm's pensions to the federal government and dumping its retiree health benefits altogether.



Delphi is at the cutting edge of a crisis that's engulfing the U.S. auto industry, much as it did steel and airlines. Its actions are adding to a gathering trend, a shift of economic risks once largely borne by business and government to the backs of working families.

Before the trouble is over, some believe, a corporate icon such as Ford Motor Co. or GM could be swept from the American landscape. So too could much of what remains of the already frayed relationship between millions of working people and their employers.

"When the history of this period is written, Delphi will be viewed as the tipping point where the auto industry either got its act together or failed," said David E. Cole, the son of a former GM president and head of the Center for Automotive Research, based in Ann Arbor, Mich. "The spillover to the rest of the economy is going to be tremendous."

For Seibert, 56, the spillover was immediate. That's because in addition to his pension, he had been socking away money in a company-administered savings account similar to a 401(k). Unfortunately, he had directed almost all of its $84,000 balance into Delphi stock. When the company declared bankruptcy, its shares plunged from a 12-month high of $9 to 33 cents, all but wiping out his account.