Delphi Files For Bankruptcy

[ragingfish]

Quote »Delphi files for bankruptcyAuto-parts maker to continue negotiations with UAW, GMThe Delphi Corp. headquarters in Troy, Mich.Updated: 4:36 p.m. ET Oct. 8, 2005DETROIT - Delphi Corp., the nation’s largest auto supplier, filed for bankruptcy Saturday, sending shock waves through a U.S. auto industry already weakened by high labor costs and falling market share.Delphi’s bankruptcy, which is expected to result in plant closures and layoffs, is one of the largest in U.S. history.Delphi filed to reorganize its U.S. operations in federal bankruptcy court in New York, where a hearing was scheduled Saturday. Delphi’s non-U.S. operations were not included in the filing.Story continues below ↓ advertisementDelphi Chairman and CEO Robert S. Miller said the company hopes to emerge from Chapter 11 in early to mid-2007.“We will make every effort to make this as quick as possible,” Miller told The Associated Press on Saturday.Negotiations with GM, UAWMiller, a restructuring expert who was hired in July, had threatened to take the company into bankruptcy if he failed to reach a restructuring agreement with Delphi’s former parent, General Motors Corp., and its largest union, the United Auto Workers. Miller set a deadline of Oct. 17, when U.S. bankruptcy laws are scheduled to change.Miller said Delphi will continue negotiating with GM and the UAW to lower its labor costs. Miller said the three parties agreed to continue their discussions after a bankruptcy filing.“We mutually concluded there was still too much of the complex work yet to be done,” Miller said. “It was not going to be efficient to work right up to the midnight deadline to the change in the law.”Miller said nothing will change immediately. Delphi will continue to pay its 50,000 U.S. employees and suppliers and will ship its products on schedule. Delphi has 31 plants in 13 states, including Michigan, Ohio, Alabama and California. The company has 185,000 employees worldwide.“We are not going to adversely affect our customers,” he said. “Our people will get their pay checks and will still have their health benefits. Retirees will continue to get their checks. Any changes to that will be dealt with in an orderly way.”‘Rough few months’Jim Gillette, supplier analyst for CSM Worldwide in Grand Rapids, said he expects a number of underperforming plants to be shuttered or sold and that the negotiations with GM and the UAW will be key to determining how many. He also said the bankruptcy could prompt other companies to file, too.“This is not going to be an isolated incident,” he said. “It’s really going to be a rough few weeks and a rough few months for the industry.”GM said it planned to work with Delphi, the courts and the unions as the auto supplier restructures, and acknowledged the filing could cause supply problems in the future.Delphi will finance its operations with $4.5 billion in loans, including up to $2 billion in debtor-in-possession financing from a group of lenders led by JPMorgan Chase Bank and Citigroup Global Markets Inc.Based in the Detroit suburb of Troy, Delphi has struggled to make a profit since GM spun it off in 1999. It lost $4.8 billion in 2004 and nearly $750 million in the first half of this year.Delphi, No. 63 on the 2005 Fortune 500 list of the country’s largest corporations, had listed $17.1 billion in assets and $22.2 billion in debt in Saturday’s bankruptcy petition. The company had $4.3 billion in unfunded pension liabilities at the end of 2004, according to a company filing with the U.S. Securities and Exchange Commission.The largest corporate bankruptcy in the U.S. was WorldCom Inc., which had $103.9 billion in pre-bankruptcy assets.Industry struggleLike Tower Automotive Inc. and other auto suppliers who have recently declared bankruptcy, Delphi has struggled with the high cost of steel and other raw materials as well as U.S. production cuts.But Delphi also blamed its spinoff agreement with GM for saddling it with high labor costs. Under the agreement, Delphi is required to pay GM wages of $27 an hour to most of its 24,000 UAW-represented workers. That’s double the level of competing suppliers, according to Standard & Poor’s Ratings Services. Delphi also had to pay full wages and benefits to 4,000 laid-off workers in jobs banks, which cost it $400 million each year.Delphi has a total of 30,000 U.S. hourly employees and 12,000 hourly retirees. About 6,000 hourly employees are represented by other unions, including the International Union of Electronic Workers/Communications Workers of America.Delphi and GM have been tightlipped about the negotiations. But a letter sent from UAW leaders to union members in Kokomo, Ind., earlier this week said Delphi asked the UAW to accept wage cuts of more than 50 percent, to $10-$12 an hour, and eliminate the jobs bank. Delphi also called for a reduction in health care benefits and vacation time.Delphi also has been plagued by an accounting scandal that the FBI and the SEC are now investigating. Six people have resigned because of the investigation, including Delphi’s former Chief Financial Officer Alan Dawes.Copyright 2005 The Associated Press. Source: http://www.msnbc.msn.com/id/9618565/In related news:Quote, originally posted by media.gm.com »GM Comments On Delphi Filing Under Chapter 11DETROIT - General Motors Corp. (NYSE: GM) today said it expects no immediate effect on its global automotive operations as a result of Delphi Corp.'s (NYSE: DPH) Chapter 11 filing.GM plans to work constructively in the Chapter 11 proceedings with the court, Delphi, its unions and other participants in Delphi's restructuring process. GM's goal is to pursue outcomes that are in the best interests of GM and its stockholders, and that enable Delphi to continue as an important supplier to GM.Delphi has indicated to GM that it expects no disruption in its ability to supply GM with the systems, components and parts it needs as Delphi pursues a restructuring plan under the Chapter 11 process. Although the challenges faced by Delphi during its restructuring process create operating and financial risks for GM, that process is also expected to present opportunities for GM over time.For example, on the one hand, Delphi or one or more of its affiliates may reject or threaten to reject individual contracts with GM, either for the purpose of exiting specific lines of business or in an attempt to increase the price GM pays for certain parts and components. As a result, GM might be adversely affected by disruption in the supply of automotive systems, components and parts which could potentially force the suspension of production at GM assembly facilities.On the other hand, GM estimates that it currently pays a purchase price premium to Delphi in the aggregate of approximately $2 billion a year above globally competitive market prices for systems, components and parts purchased from Delphi's North American operations. GM believes that a restructuring of Delphi through the Chapter 11 process provides GM with an opportunity to reduce or eliminate that purchase price premium, over time, as well as improve the quality of systems, components and parts it procures.In connection with the Delphi split-off, GM has provided limited guarantees with respect to certain benefits payable by Delphi to former GM U.S. hourly e
mployees who transferred to Delphi relating to pensions, post-retirement health care and life insurance. The Delphi Chapter 11 filing does not by itself trigger any of the benefit guarantees.GM intends to provide additional information regarding matters affecting GM due to Delphi's filing under Chapter 11 as soon as practicable.Forward Looking StatementsAll statements contained or incorporated in this Form 8-K which address events or developments that we expect or anticipate may occur in the future, such as, but not limited to, GM's production and operating performance, the impact of Delphi's bankruptcy on GM's global automotive operations, ability to address future obligations and to do so out of normal operating cash flow, the enforceability of the right to fully or partially set-off obligations owed to Delphi against amount owed by Delphi to GM, the ability of GM's vendors, including Delphi, to meet GM's current needs and to do so in a timely manner, enforceability of the Delphi's agreement to indemnify GM, the ability to reduce or eliminate the purchase price premium, statements regarding the enforceability of the benefit guarantee, and estimates of financial impact of the benefit guarantee are among the forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.These statements represent our current judgment on what the future may hold, and we believe these judgments are reasonable, actual results may differ materially due to numerous important factors that are described below and other factors that may be described in subsequent reports that GM may file or furnish with the SEC: * The ability of Delphi to meet its financial challenges; * Changes in financial conditions of Delphi and Delphi's ability to satisfy the Indemnification if Delphi is cannot meet its financial challenges; * The impact on GM and GM's other suppliers if Delphi is cannot meet its financial challenges; * Interpretations of the agreements between GM and Delphi and GM and the unions; * Interpretations by the Bankruptcy Court and any changes in the federal bankruptcy code; * Changes in the competitive environment; * Changes in relations with Unions; * The ability of the GM to achieve reductions in cost of supplies and to realize production efficiencies, and to implement capital expenditures, all at the levels and times planned by management; * The ability to met cash flow objectives at the levels and times planned by management; and * Other factors, risks and uncertainties discussed in our filings with the SEC. GM does not intend or assume any obligation to update any of these forward-looking statements.Source: http://media.gm.com/servlet/Ga...19342

[ColonelPanic]

Uh oh.... GM better be finding them a new supplier...

[ToolGuy]

Have a friend that works there, does hot and cold testing on HVAC systems....

[scherry2]

http://www.dissentmagazine.org...e=409 interesting article.