Delphi on track to achieve 6,000 U.S. job cuts
Tempest
The closing of a Delphi Corp. factory in Flint places the world's
largest auto supplier on track to meet a goal of reducing its U.S.
hourly work force by up to 6,000 by year's end, the company said
Monday.
By JOHN PORRETTO
Troy-based Delphi said it had ceased production at its Flint West
facility, and as of last week all 450 remaining workers had chosen
options such as retirement or transfers to other jobs.
Delphi said the Flint West closing was the largest of four planned
U.S. consolidations this year. Spokesman David Bodkin said Delphi
eventually will close operations in Anaheim, Calif., Olathe, Kan., and
Tuscaloosa, Ala. Delphi also has closed five non-U.S. facilities this
year.
"While growth remains the leading part of our strategy, we're also
challenged to reduce our legacy-cost structure, and we're on track to
do so as we make our U.S. operations more competitive," said Delphi
chief financial officer Alan Dawes.
The Flint West plant had produced automotive generators. Bodkin said
the work would be consolidated at another Delphi plant, though it was
uncertain if production levels would remain the same.
Dawes said the consolidation supports a "critical cost reduction
portion" of a restructuring announced in October 2003. At the time,
Delphi said it expected to eliminate up to 5,000 jobs held by hourly
union members in the United States by the end of 2004.
The supplier, which was spun off from General Motors Corp. in 1999,
has since adjusted the goal to 5,500 to 6,000 workers. Delphi said it
had reduced its U.S. hourly headcount by 4,925 as of June 30.
Delphi, whose biggest customer is GM, and other suppliers are facing
increasing pressure from automakers to lower prices in the
ultra-competitive marketplace.
This spring, Delphi and Visteon Corp., the nation's second-biggest
auto supplier, finalized agreements with the United Auto Workers for a
two-tier wage structure the companies say will make them more
competitive by offering lower wages for new hires.
Delphi said the supplemental agreement allows it to pay new U.S. hires
a starting wage of $14 an hour. Current UAW workers at Delphi and
Visteon are paid $24 an hour on average, although some earn $36 an
hour.
In exchange, Delphi and Visteon agreed to make capital investments in
their UAW-represented plants to improve product quality and
competitiveness. They also pledged to allocate new work from existing
and potential customers to UAW-represented facilities.
Delphi, which has 186,000 employees worldwide, earned $131 million in
the second quarter as it continued to expand business aside from GM.
Analysts say lower planned production at GM in the fourth-quarter
could hurt profits in the second half of 2004.
In afternoon trading on the New York Stock Exchange, Delphi shares
were up 14 cents to $9.16.