WARREN - Many hard-won union gains are gone. City leaders face a $1 million drop in income tax revenue this year.
Throw in a credit crunch that's making it hard for even healthy companies to find cash, and the challenges facing Delphi Corp. as it nears the the third anniversary Wednesday of its Chapter 11 bankruptcy filing take shape.
The parent of Warren area Delphi Packard Electric on Friday filed in bankruptcy court modifications to its amended reorganization plan, which includes new financing from former parent General Motors Corp. and other changes.
A preliminary hearing is scheduled for Oct. 23 in bankruptcy court in Lower Manhattan, with the final hearing set for Dec. 17.
In news reports late last week, the architect of Delphi's bankruptcy, Robert S. ''Steve Miller'' cautioned the auto parts maker may not leave bankruptcy by year's end, as was anticipated. The company has to shop around an amended reorganization to raise as much as $4 billion in a financial crisis considered the worst since the Great Depression.
Delphi spokesman Lindsey Williams called recent changes in Delphi's agreements with GM ''significant in terms of moving the process forward. When you look at all the downside in the economy, it's telling that we've done all the things we set out to do in our transformation plan.
''The bankruptcy has gone longer than we anticipated when we filed, but we've made significant progress,'' he said.
That reorganization includes changes in work rules and conditions that a local labor leader said are ''very disturbing'' for people long involved in the union.
''So many unprecedented events have occurred - major concessions in wages and benefits, losing the Lifetime Job and Income Security Agreement,'' said Mike O'Donnell, shop chairman of IUE-CWA Local 717 at the Warren area Delphi Packard Electric operations.
The latter was a 1984 agreement that protected workers' regular income in the case of layoffs. It was widely hailed for years as a model of labor-management cooperation.
Meanwhile, Warren Mayor Michael O'Brien said the city is the victim of a ''double whammy'' - losing scarce tax dollars and not being able to offer vacant factory space to new employers who would help replace the lost revenue.
He said the city's income taxes averaged $1.4 million a year from 2001 through 2005 related to Delphi Packard's Warren headquarters and various plants.
That total shrank to $619,000 in 2007 after the auto parts maker shed 3,130 workers through retirement and buyout payments offered in 2006.
The projection for this year: $125,000 to $150,000, he said. The tax losses stem from drastic downsizing of the hourly work force from 3,800 at the filing to 750 now, largely done through early retirement and buyout offers of as much as $140,000.
''It's an obvious financial problem. There's still the need for services in the city, but we have $1 million less to operate with,'' he said.
Adding to the problems is that the length of the Delphi bankruptcy is preventing city officials from putting new employers into the buildings Delphi Packard has vacated in Warren, where the Packard brothers founded the business in 1890.
''We have potential companies that would like to use the facilities, but the buildings aren't available right now because they're tied up in bankruptcy court. It's a double whammy - we lose jobs and we can't replace the jobs because we're not permitted to have the facilities just yet,'' O'Brien said. ''A light at the end of the tunnel would at least be the end of bankruptcy.''
Key bankruptcy court actions in late September are seen as pushing the company closer to leaving bankruptcy around year end. Former parent, General Motors Corp., will assume $3.4 million in Delphi pension obligations for hourly workers and kick in $1.2 billion in cash to give Delphi ''ample liquidity'' through year end - an important element considering the deepening global credit crisis.
In all, GM will contribute about $10.6 billion to help Delphi get out of bankruptcy, up from $6 billion.
Local 717's O'Donnell found irony in the fact GM has to help fund Delphi's emergence from bankruptcy, especially since the automaker planned to save money by spinning off the parts division in 1999.
The spinoff allowed GM to get what it couldn't win at the bargaining table lower wages and benefits, he said. Now, however, GM is shelling out more in courts because Delphi can't find funding to get itself out of bankruptcy.
O'Donnell echoed the common speculation among union workers that GM helped push Delphi into bankruptcy with its demands for lower parts prices.
He noted GM got a commitment after the spinoff from Delphi that it had to lower its auto parts prices by certain percentages to match prices of suppliers outside of GM if it wanted to keep its GM business.
At the same time, the IUE-CWA and UAW got commitments from Delphi before the spinoff that their wages and benefits would be patterned on what the UAW got from GM for assembly, putting the fledgling company in an nearly impossible situation.
''In hindsight, experienced union leaders like myself and others should have recognized that ahead of time,'' O'Donnell said. ''We all got caught up in the optimism of Delphi going out on its own, and the hype that now we could pursue non-GM customers, and that would make us grow.''
GM spokeswoman Renee Rashid-Merem countered that ''it's been well documented that Delphi's pricing has been at a premium to GM and not as competitive as other suppliers that can provide similar business. That's part of what their restructuring is aimed at doing get Delphi into a position where they can be competitive in the businesses they choose to be in.''
She said GM has shown during the last three years that it's been ''actively engaged with Delphi in trying to help them develop a plan that will allow them to successfully emerge a stronger company.
''Delphi was independent six years prior to filing bankruptcy. They had six years to attract new customers and adjust their business to how they felt appropriate. To suggest it (bankruptcy) was expected is inaccurate,'' she added.
Delphi was able to win non-GM customers, but those customers also wanted lower prices, which forced Delphi to shift more production to lower wage countries like Mexico, O'Donnell said.
Because foreign factories and other operations are profitable, Delphi didn't include them in its bankruptcy filing, something that rankles many observers.
John Russo, co-director of Youngstown State University's Center for Working-Class Studies, termed Delphi's bankruptcy as its ''getaway.''
''Delphi had the separation agreement (from GM), and almost immediately started expanding their international operations,'' he said. ''Then they attempted to negotiate agreements with the unions that were below agreements with other auto suppliers. Then they went into bankruptcy and attempted to push pension obligations onto GM and the PBGC (Pension Benefit Guaranty Corp.).''
Besides the impact on workers and suppliers, the bankruptcy is taking its toll on communities such as Warren where Delphi and workers were major taxpayers, he added.
The bankruptcy's legacy, Russo said, will be gauged in how successful Delphi will be in its ''getaway.''
''It looks like they will be,'' he said.
