DETROIT -- Delphi Corp. and Johnson Controls Inc. last week ironed out a dispute stemming from a 2005 battery manufacturing deal.
Johnson Controls bought most of Delphi's global battery assets for $202.5 million in June 2005. But then the suppliers squabbled late into the summer over two U.S. plants Delphi was forced to keep because of union complications. Delphi filed for Chapter 11 bankruptcy protection in October.
Finally, on June 26, U.S. Bankruptcy Judge Robert Drain approved a plan to sell Delphi's battery plant in New Brunswick, N.J., to Johnson Controls and switch production from a Delphi plant in Fitzgerald, Ga., to Johnson Controls sites.
The deal means Johnson Controls will pay an additional $14.2 million for Delphi's battery operations.
The arrangement is Delphi's latest move to scale back U.S. manufacturing from 44 plants to eight to concentrate on core businesses, such as electronics.
Johnson Controls agreed to pay $1 for the New Brunswick plant and $1.7 million for its inventory. The supplier also will pay Delphi $12.5 million to ease the expected $18 million to $22.8 million cost of buying out the plant's work force.
Court papers indicate the plant's work force will drop from 300 to 100 when Johnson Controls takes it over Aug. 1.
Delphi will continue to supply batteries to Johnson Controls from the Fitzgerald plant. As Delphi's UAW workers leave with buyouts, production will shift to Johnson Controls.
Court papers say the New Brunswick plant currently loses about $3 million a month and the Fitzgerald plant about $2 million a month. Delphi will continue to own the Fitzgerald plant, though a company spokesman said the plant's future is under discussion.
Last September, the dispute boiled over into a civil suit brought by Johnson Controls against Delphi. The court issued a compromise ruling, and the sides began settlement talks.
You may e-mail Greg Migliore at [email protected]