Politics & Policy

Factory-Sized Deception

Obama, freely trading in dishonesty.

In the days leading up to the March 4 Ohio primary, Barack Obama’s presidential campaign aired a TV ad that featured a man named Steven Schuyler standing in front of a Delphi Packard Electric plant in Warren, Ohio. In the ad, Schuyler says he worked for Delphi, an automotive supplier, for 13 years until NAFTA enabled the company to ship his job to Mexico. “Barack Obama was against NAFTA,” Schuyler says, adding, “We need a president that will bring work into this country.”

The Delphi ad might qualify as the most deceptive of the 2008 race. First, Delphi did not exist as an independent company when Congress passed NAFTA in 1993. It was part of General Motors until it was spun off as an independent supplier in 1999. Second, foreign competition did not drive the company to eliminate American jobs. It declared bankruptcy in 2005 because the legacy labor costs it inherited from GM made it impossible to compete against other U.S.-based suppliers. Third, workers at the Warren, Ohio plant were offered generous buyouts and early-retirement packages. Its employees were not just kicked to the street.

When Delphi became an independent company in 1999, it inherited GM’s high-wage, high-benefit autoworkers’ union contracts. Addressing reporters after Delphi declared bankruptcy in 2005, then-CEO Robert S. “Steve” Miller explained, “other U.S.-based suppliers, many of which were organized by the same unions . . . were paying less than half the automaker wages and benefits [that Delphi was paying].” Contrary to Obama’s ad, domestic competition played a bigger role in Delphi’s downfall than did competition from Mexico.

Even with its legacy costs, Delphi might have managed. But its relationship with GM harmed it in other ways. When Delphi declared bankruptcy, GM was still its biggest customer, responsible for about 50 percent of its sales. When GM’s market share tanked in 2003, so did Delphi’s profits. Delphi’s fate and the fates of its U.S. employees are tied to the fate of GM, which for multiple reasons has struggled, along with Ford and Chrysler, to stay afloat in recent years.

In his 2005 remarks to reporters, Miller argued that the U.S. auto industry’s problems have little to do with import competition. “Toyota, Nissan, and Honda are competing from assembly plants in our back yard,” he said, “but without the crippling work rules and social costs embedded in [GM, Ford, and Chrysler’s] labor contracts.”

The example of Honda is particularly relevant to any examination of Ohio’s economy. The Japanese automaker opened its first plant in Ohio in 1979, and since then it has opened three more and become one of the state’s top employers. Workers in Honda’s Ohio plants don’t belong to a union, but the company pays competitive wages and benefits and has never laid off any of its Ohio employees.

As for Delphi Packard Electric in Warren, Ohio, it was downsized as part of the corporate restructuring that followed the bankruptcy, but — unlike other Delphi plants in the U.S. — it wasn’t shuttered or sold. All but 700 of the plant’s 3,800 employees took buyout offers or early-retirement packages. Those who stayed on accepted a new labor contract that brought wages and benefits closer to the prevailing rates in the supply business.

In April 2007, the Youngstown Vindicator ran a story about a former Delphi employee named Karole Kowalski who took a $140,000 buyout and invested it in an associate’s degree at Youngstown State University. “She’s excited about her plan,” according to the report, “and is hopeful the cutbacks at Packard were the best thing that could have happened to her. She couldn’t work as a laborer any more because of her back, and the buyout has given her the chance to retrain.”

If all ex–Delphi Packard workers were offered buyouts or early-retirement packages, it stands to reason that Steven Schuyler, the man in the Obama TV ad, took a similar deal. The Obama campaign ignored National Review Online’s repeated requests for more information about Schuyler, but a Delphi retiree told the Vindicator, “Schuyler took the buyout and got a good cash sum to quit his job.” When I spoke to Vindicator editor Todd Franko, he said he still hadn’t been able to contact Schuyler to confirm this.

Kowalski and Schuyler offer dramatic contrasts for participants in the debate over free trade in this country. Kowalski’s approach speaks of a willingness to embrace the changes that are occurring in the U.S. economy and view them as opportunities. Schuyler’s approach — the one Obama has apparently embraced — is characterized by bitterness that things had to change, and rank dishonesty about why they did.

– Stephen Spruiell is an NRO staff reporter.

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