SAE Meeting Set for Detroit by Joseph Szczesny
(4/2/2006)
Revived interest sparks new ideas at tech conference.
GM Says Turnaround Gaining by Joseph Szczesny
(4/2/2006)
A week of financial news could contain the seeds of recovery.
Delphi Corp. on Friday
outlined a broad plan for restructuring into a smaller, more nimble company, as
it sheds much of legacy operations and labor contracts that it inherited from
General Motors.
The plan was laid out by Delphi
CEO Robert “Steve” Miller last week, as Delphi petitioned its federal bankruptcy
judge to cancel the company’s contracts with the UAW and other unions, and
called for closing or selling off 21 of 29 manufacturing sites in the U.S.
In doing so Delphi is running the
risk of serious confrontation with key unions and also with GM, which for the
first time questioned publicly the course and strategy plotted by Miller and
Delphi’s board of directors.
The United Auto Workers ripped the
company’s actions in uncompromising terms.
“Delphi’s misuse of the bankruptcy
procedure to circumvent the collective bargaining process and slash jobs and
wages and drastically reduce healthcare, retirement, and other hard-won benefits
or eliminate them altogether is a travesty and a concern for every American,”
said UAW president Ron Gettelfinger in a blistering statement denouncing the
plan.
“Actions like this just bring us one step closer to confrontation,” said Henry Reichard, who represents plants in Ohio and other states for the International Union of Electronic Workers-Communications Workers of America, which covers 8000 Delphi hourly workers.
Rhetoric aside, however, the UAW
also has effectively broken off communication with Delphi. In addition, in
another 60 days Richard Shoemaker, the UAW vice president in charge of
discussion with Delphi, is set to retire. GM’s labor experts had warned Miller
that he would be better off dealing with Shoemaker than his successor.
“We disagree with Delphi’s
approach, but we anticipated that this step might be taken,” Rick Wagoner, GM’s
chairman and chief executive officer, said in a statement. “GM expects Delphi to
honor its public commitments to avoid any disruption to GM operations,” he added
pointedly.
Delphi also asked the bankruptcy
judge to void what it described as unprofitable contracts. Some $5 billion of
contracts with GM are no longer profitable, according to Delphi.
As part of its transformation in a
smaller, leaner, more technologically focused company, Delphi is preparing to
eliminate 25 percent of its 8500 salaried jobs, cut 40 percent of its senior
executive positions, and overhaul compensation for salaried employees as it
reorganizes its electronics business.
Particularly hard-hit by the
transformation plan was Dayton, Ohio, where Delphi had maintained a half-dozen
manufacturing sites. Four of the five plants could close and 6000 jobs could be
eliminated in the city that was once home to “Boss” Kettering, the fabled
inventor who was at the heart of General Motors component-making operation.
Rodney O’Neal, Delphi’s chief
operating officer, said the new round of cuts is expected to save Delphi $450
million per year on top of the savings realized from competitive measures
planned for its core businesses and the disposition of assets that are no longer
deemed essential to the company.
O’Neal also said Delphi plans to
restructure its employee healthcare plan. “These changes will be implemented in
conjunction with footprint and portfolio changes as well as other efforts to
improve efficiency and reduce Delphi’s overall cost structure,” O’Neal said.
O’Neal emphasized that the
transition process will be orderly. Among the first operations to hit the
auction block could be the company’s Saginaw Steering Gear Division. Buyers from
as far away as India have expressed an interest in the steering gear business.
Sean McAlinden, chief economist for the Center of Automotive Research, has said
GM’s purchasing operation is prepared to serve as a broker for other deals.
Delphi’s objective is to maintain
a strong basis in the electronics business, which is based around the company’s
manufacturing center in Kokomo, Ind. The success of the strategy, even if Delphi
achieves its goal of emerging from bankruptcy next year, is problematic. GM is
already pursuing a new policy of purchasing more of its electronics in China and
the Far East, a recent story in Automotive News noted.
GM also has first claim on Delphi’s assets and while the claim is being challenged in court, GM could decide the best way to recoup its costs from helping Delphi avoid a disastrous strike would be to sell off the electronics units piece by piece to a growing list of potential buyers.
Email This Page