Confidential Delphi Outlines Plan to Emerge from Chapter 11
By the Detroit News
daytondailynews.com
DETROIT | Delphi Corp. is studying a sweeping plan to remake its Electronics and Safety division by shedding U.S. factories — including its Vandalia operations — shutting technical centers and possibly buying rival Motorola Corp.'s automotive unit, according to an internal company document.
In a confidential document outlining a plan code-named "Northstar," Delphi cites the restructuring of its Electronics and Safety unit as a cornerstone of its long-range effort to reorganize in Chapter 11 bankruptcy.
The document — a copy of which was obtained by The Detroit News lays out a draft of Delphi's game plan to expand one of its core divisions even as it abandons several money-losing product lines and closes plants.
In its drive for "global dominance" of the auto electronics and safety markets, Delphi will pursue "aggressive cost reduction via product exits, site consolidation, and legacy labor cost reduction," the document said.
Moreover, the auto-parts giant is committed to "execute ruthless portfolio management" by focusing on "more winners, more exits."
In addition to the Vandalia closings, key components of the plan include the "exits" of four other U.S. plants — Flint East; Kokomo (Ind.) Plant 9; Milwaukee; and Tucson, Ariz.
The "Northstar" plan does not indicate which of Vandalia's Delphi operations would be closed. Vandalia's operations at 480 N. Dixie Drive are in Delphi's Automotive Holdings Group, a division created in January 2003 for the company's poorest-performing operations. Delphi Thermal and Interior at 250 Northwoods Blvd., is not in the holding group, but could be closed in bankruptcy action.
Vandalia has about 800 workers at its locations.
The document also identifies "Motorola Automotive" as an acquisition target. The cell-phone maker has reportedly been shopping its auto electronics operations that generated $1.7 billion in sales last year.
A Delphi spokeswoman said Tuesday that the document, which carries the forward-looking date of Nov. 9, is a draft of possible options for the Electronics and Safety division, which accounts for $5.8 billion of Delphi's annual sales of about $28 billion.
The document appears to be an upcoming presentation that will be made by Beth Schwarting, Delphi's general director of sales and marketing for the Electronics and Safety division.
"We are aware that a confidential draft document was apparently released publicly without authorization," said Karen Healy of Delphi.
"It is a draft, and it does not necessarily reflect current plans."
Healy said that "lots of options are under consideration" as Delphi, based in Troy, Mich., looks to restructure its operations in the aftermath of becoming the largest U.S. industrial company to file for bankruptcy.
She noted that any restructuring plans need to be approved by the U.S. Bankruptcy Court in New York.
Delphi Chairman Robert S. "Steve" Miller has said that the company expects to close, sell or consolidate some U.S. plants to become profitable.
While Delphi's Electronics and Safety division represents approximately one-fifth of Delphi's operations, the Northstar document identifies it as a critical part of the company's future.
The Northstar document is surfacing at a time when Delphi and its labor unions are in tense negotiations over a controversial proposal that would radically reduce the wages and benefits of the supplier's 33,000 U.S. hourly workers.
Yet the Northstar plan appears to spell trouble for several plants regardless of those negotiations. |
