WARREN Delphi Packard aims for growth in switch-making

Delphi Packard is reviewing all business lines to see which ones should be sold.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
WARREN -- Delphi Packard Electric Systems is expanding its switch-making business as it looks for other areas to cut.
Its parent company, Delphi Automotive Systems, said Monday that it intends to acquire the vehicle switch and electronics division of Eaton Corp. for $300 million. The deal is expected to close by the end of the month, said Ann Cornell, a Delphi Packard spokeswoman.
Eaton's switch operation, which is based in Illinois but has plants worldwide, would be part of Delphi Packard's expanding switch business, she said.
As Delphi Packard boosts that business, it is looking for other business lines to eliminate, she said.
Focusing on fewer: J.T. Battenberg III, Delphi chairman, said in December that the Michigan-based corporation needs to fix, close or sell business lines that generated between $4 million and $5 million in revenue.
The company, which had total revenue of $29 billion last year, must concentrate on what it does best, he said.
Cornell said executives are reviewing all business lines and will be labeling them in the next couple months as lines that should be expanded, eliminated or reviewed further.
She said such reviews have been ongoing but Battenberg indicated the pace of divestitures would accelerate this year.
Delphi Packard has not had any divestitures recently, but did consolidate plants in South America last year, she said.
Eyeing personnel needs: Delphi Packard also has been reviewing its personnel needs. It offered an early-retirement incentive to salaried workers through Feb. 1 to adjust its work force to current business levels, Cornell said.
She declined to say how many workers accepted the package. She said no further cuts are planned. Delphi Packard had 1,800 salaried workers and 5,400 hourly workers in January.
Last week, it reduced the hourly work force by 227 because of a downturn in the automotive industry.
It also has been laying off hundreds of workers temporarily for one week at a time. About 450 hourly workers are laid off this week.
The switch business, however, is one that already has been identified as a growth line.
Delphi Packard said the global automotive-switch market is $3.8 billion, but should be more than $7 billion by 2010.
Rising demand: The demand for switches is increasing as more electronics are added to vehicles. Uses include power-assisted windows, interior lighting and remote keyless entry systems.
Eaton's switch sales were about $320 million last year. Delphi Packard said it will be in the top three automotive-switch makers with the Eaton business.
The added business will expand Delphi Packard's manufacturing and engineering abilities and give it a more diversified customer base, Cornell said.
Eaton's primary switch customers include DaimlerChrysler, Ford, General Motors, Rover, BMW and VW Group.
When expansion began: Delphi Packard has been expanding its switch business since it bought a European switch company in 1996. It entered a joint venture with a Korean company in 1998 and recently signed a licensing agreement with Duraswitch Industries that gives Delphi Packard the exclusive license to use Duraswitch technology in the automotive industry.
Cornell said switches fit well with the company's other electrical wiring products, but Delphi Packard also intends to expand into nonautomotive markets.
Eaton, a Cleveland-based manufacturer, said last year that it intended to sell the switch business because it didn't fit into its core businesses.
The division has 3,850 employees worldwide. Besides its Illinois headquarters and engineering facility, it has manufacturing plants in Germany, Spain, Poland, Mexico and Brazil.
It has other engineering offices in France and Germany.