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DETROIT -- Delphi Corp. soon could look like a Third World manufacturer.
Under the early-retirement agreement reached last week, up to 18,000 unionized Delphi workers could retire or return to General Motors. That would enable Delphi to become smaller and more profitable by producing most components in low-wage countries.
Delphi CEO Steve Miller still must negotiate a new labor contract with the UAW that would enable him to slash hourly U.S. wages. But even with a cheaper work force, Delphi's U.S. operations could shrink dramatically.
If Miller were to eliminate all U.S. factories that do not produce electronics and other market-leading components - products on which Delphi has bet its future - the company's U.S. operation would shrink from 44 factories to about six.
By contrast, Delphi has 46 factories in Mexico and South America, 59 factories in Europe and the Middle East, and 14 plants in Asia.
That kind of shrinkage in the United States assumes that Delphi would reduce its U.S. work force of 33,000 hourly employees by half. The early-retirement program announced last week appears to make that possible.
Company spokesman John Shea declined to indicate just how deeply Delphi wants to cut U.S. operations. He said the company is still evaluating its product portfolio.
Delphi's strategy - shrink U.S. operations while growing elsewhere - appears to mirror that of rival Visteon Corp. Last year, Visteon returned thousands of U.S. workers and 23 plants to former parent Ford Motor Co.
Then Visteon set ambitious goals to slash its average companywide wages and benefits - goals that can be achieved only by producing most components in low-wage regions such as Mexico and Asia.
A UAW spokesman was not immediately available for comment.
Category killers
Miller has not said how many U.S. plants he intends to close or how many product lines he will abandon. But he has said that he wants to focus on high-tech components in which Delphi can be a "category killer."
Delphi is betting heavily on electronic components such as infotainment and navigation devices, sensors, engine control units and fuel injection. One-third of the company's engineers are devoted to electronics.
If Delphi focuses exclusively on its category killers, it would keep just six U.S. plants, according to an automotive electronics expert who asked not to be identified. Those factories are in Anderson, Ind.; Oak Creek, Wis.; Kokomo, Ind.; Rochester, N.Y.; Coopersville, Mich.; and Wichita Falls, Texas.
Those six Delphi operations collectively employ 18,278 of Delphi's 33,000 hourly workers, according to the ELM Guide to U.S. Automotive Sourcing.
Most of those plants are part of Delphi's Electronics & Safety Systems division. One of the largest of the six-plant group is the Kokomo operation. Kokomo's 6,300 workers produce ignition electronics, pressure sensors, antilock brakes, traction control and other electronics.
According to the ELM Guide, Kokomo's customers include the Chrysler group, General Motors and Toyota.
Miller has acknowledged that his company will have a much smaller manufacturing presence in the United States. Delphi already employs more hourly workers in Mexico and South America than it does in the United States.
In fact, Delphi is one of Mexico's largest private employers. Miller has said that the company pays each of its Mexican workers about $7,000 a year. That compares with an average wage-and-benefit package for each U.S. worker that totals $105,000 a year.
With fewer U.S. employees, Miller could expand his wish list of plants to close. Late last year, he told Automotive News that he wants to shed plants and product lines that generate $5 billion in annual revenue.
Of that amount, Delphi's fix-close-or-sell list of troubled factories accounts for $2.57 billion in revenues.
GM's announcement last week to take back 5,000 workers from its former parts division and offer retirement incentives to 13,000 other Delphi workers would enable Miller to cut his U.S. operations more deeply.
Will the UAW allow Miller to close all U.S. factories that don't produce category-killer products? Stay tuned.
HIJACK NOT ON>>>>>>>
The "H" is for HELP and the "I" is for ISSUES....
DETROIT -- Delphi Corp. soon could look like a Third World manufacturer.
Under the early-retirement agreement reached last week, up to 18,000 unionized Delphi workers could retire or return to General Motors. That would enable Delphi to become smaller and more profitable by producing most components in low-wage countries.
Delphi CEO Steve Miller still must negotiate a new labor contract with the UAW that would enable him to slash hourly U.S. wages. But even with a cheaper work force, Delphi's U.S. operations could shrink dramatically.
If Miller were to eliminate all U.S. factories that do not produce electronics and other market-leading components - products on which Delphi has bet its future - the company's U.S. operation would shrink from 44 factories to about six.
By contrast, Delphi has 46 factories in Mexico and South America, 59 factories in Europe and the Middle East, and 14 plants in Asia.
That kind of shrinkage in the United States assumes that Delphi would reduce its U.S. work force of 33,000 hourly employees by half. The early-retirement program announced last week appears to make that possible.
Company spokesman John Shea declined to indicate just how deeply Delphi wants to cut U.S. operations. He said the company is still evaluating its product portfolio.
Delphi's strategy - shrink U.S. operations while growing elsewhere - appears to mirror that of rival Visteon Corp. Last year, Visteon returned thousands of U.S. workers and 23 plants to former parent Ford Motor Co.
Then Visteon set ambitious goals to slash its average companywide wages and benefits - goals that can be achieved only by producing most components in low-wage regions such as Mexico and Asia.
A UAW spokesman was not immediately available for comment.
Category killers
Miller has not said how many U.S. plants he intends to close or how many product lines he will abandon. But he has said that he wants to focus on high-tech components in which Delphi can be a "category killer."
Delphi is betting heavily on electronic components such as infotainment and navigation devices, sensors, engine control units and fuel injection. One-third of the company's engineers are devoted to electronics.
If Delphi focuses exclusively on its category killers, it would keep just six U.S. plants, according to an automotive electronics expert who asked not to be identified. Those factories are in Anderson, Ind.; Oak Creek, Wis.; Kokomo, Ind.; Rochester, N.Y.; Coopersville, Mich.; and Wichita Falls, Texas.
Those six Delphi operations collectively employ 18,278 of Delphi's 33,000 hourly workers, according to the ELM Guide to U.S. Automotive Sourcing.
Most of those plants are part of Delphi's Electronics & Safety Systems division. One of the largest of the six-plant group is the Kokomo operation. Kokomo's 6,300 workers produce ignition electronics, pressure sensors, antilock brakes, traction control and other electronics.
According to the ELM Guide, Kokomo's customers include the Chrysler group, General Motors and Toyota.
Miller has acknowledged that his company will have a much smaller manufacturing presence in the United States. Delphi already employs more hourly workers in Mexico and South America than it does in the United States.
In fact, Delphi is one of Mexico's largest private employers. Miller has said that the company pays each of its Mexican workers about $7,000 a year. That compares with an average wage-and-benefit package for each U.S. worker that totals $105,000 a year.
With fewer U.S. employees, Miller could expand his wish list of plants to close. Late last year, he told Automotive News that he wants to shed plants and product lines that generate $5 billion in annual revenue.
Of that amount, Delphi's fix-close-or-sell list of troubled factories accounts for $2.57 billion in revenues.
GM's announcement last week to take back 5,000 workers from its former parts division and offer retirement incentives to 13,000 other Delphi workers would enable Miller to cut his U.S. operations more deeply.
Will the UAW allow Miller to close all U.S. factories that don't produce category-killer products? Stay tuned.
HIJACK NOT ON>>>>>>>
