DETROIT Delphi Corp. will cut 8,500 hourly workers next year, including 3,000 in the United States.
The worlds largest auto supplier will make the cuts mainly because of lower production requirements from its customers and higher raw material costs. Those issues caught Delphi off guard in the second half of this year and are expected to persist through at least the first half of next year.
Delphi of Troy, Mich., lowered its fourth-quarter and 2004 earnings outlook because of those challenges.
The company now expects up to $7.0 billion in revenue for the quarter that will end Dec. 31 $200 million lower than its previous estimate and a loss of up to $143 million.
Delphi also expects up to $28.6 billion in revenue this year, up from $26.2 billion last year. The supplier had planned to make a profit but now sees a loss of $57 million.
Next year, Delphi expects a loss of $350 million on sales of up to $29.0 billion. That loss will include a charge of $150 million for the 8,500 workers.
Were not satisfied with our results and were going to have to take some action, said Delphis CEO, J.T. Battenberg III, in a conference call with analysts Friday, Dec. 10.
3 plants added to holdings group
That action includes a stepped up focus to fix, close or sell nonprofitable plants. Delphi added three plants to its business unit of money-losing U.S. plants, called the Automotive Holdings Group. They are:
1. Laurel, Miss. makes energy/engine management products
2. Kettering, Ohio makes dampers
3. Home Avenue/Vandalia, Ohio (near Dayton) makes chassis products
By year end, Delphi will have closed six plants, including four in the Automotive Holdings Group. Delphi continues to have weekly discussions with the UAW to determine what else it can do.
Job cuts span U.S.
Delphis production volumes have been thrown off most by General Motors. GM accounts for about half of the suppliers revenue. But Delphi continues to diversify its customer base and expects its GM revenue to drop to 40 percent by 2007.
Among the 8,500 jobs that Delphi will eliminate next year, it expects 500 to transfer back to GM. The remaining 8,000 will come through retirements, buyouts or attrition.
We are hopeful that a large portion will come from normal retirements, said Alan Dawes, Delphis CFO, in an interview with Automotive News. Well do some things to make sure we realize that. He did not provide details.
Most of the jobs will be in western Europe, Dawes said.
Delphi does not plan to cut salaried workers next year, Dawes said.
The supplier has cut 9,175 workers hourly and salary since October 2003. That included about 6,000 jobs in the United States. The total also included 2,000 workers that were transferred to GM. Delphi had expected to push up to 3,000 workers back to GM.
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