Delphi to cut more jobs, reduce capacity

Delphi Automotive Systems Corp. will cut an additional 1,400 salaried jobs, on top of the 11,500 job cuts announced last March, and is looking to sell or find partners for its generators, vehicles instruments and thermal systems businesses.

Delphi, of Troy, Mich., said it is taking the actions because it expects vehicle sales to fall in 2002 due to the economy and expected end of 0 percent finance incentives.

The world's largest auto supplier expects its sales in 2002 to total $25.5 billion, a 2.3 percent decline from expected 2001 sales of $26.1 billion, CFO Alan Dawes said Monday, Dec. 10. Delphi expects its net income for 2002 to be $275 million, up from about $220 million this year. But Delphi will take a $404 million charge for restructuring costs this year, and another $100 million to $150 million for restructuring next year.

The supplier said it has been working to fix or sell three business units:

  • It has signed a non-binding letter of intent to sell its generators business to Delco Remy International Inc. The business has revenues of $500 million, and has about 2,100 Delphi employees at plants in the United States, Mexico and Europe. Delphi said it would book a loss on the sale of $130 million to $150 million. It hopes to complete the deal by the end of this year.

  • Delphi is auctioning off some or all of its vehicle instruments business. The business has revenues of $500 million. Delphi said that if it can sell only part of the business, the remainder would ultimately be closed. The unit has about 1,780 employees in the United States and Mexico.

  • Delphi is looking to slash costs and finding partnerships for its thermal systems business, which makes engine cooling and interior heating and cooling units. It has about 10,350 employees in the United States, Europe, South America, Mexico and Asia Pacific. "We will need to further consolidate U.S. facilities during 2002 to address excess capacity and needed operating improvements," Dawes said.

    The supplier said it also either will temporarily or permanently close the equivalent of one of its North American battery manufacturing plants by the end of the third quarter of 2002.

    Delphi also plans to consolidate its Western European operations. As many as 12 plants there initially will be affected, and more may be included in 2002.

    The supplier in March announced a restructuring plan, which involved closing nine plants, consolidating operations at about 40 other plants and eliminating 11,500 jobs. These actions will be complete by the end of the first quarter of 2002, said Dawes.

    The supplier expects its non-GM sales to account for 36 percent of its 2002 sales. That compares with 2001, when non-GM sales accounted for 32 percent of Delphi's sales.

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