DELPHI AUTO Earnings drop in 3rd quarter

Delphi's revenues drop 6 percent as car production falls.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- A weak auto market continues to hurt Delphi Automotive Systems, which reported an 82 percent drop in third-quarter profits.
The Michigan-based auto supplier, which is the parent company of locally based Delphi Packard Electric Systems, earned $26 million, or 5 cents a share, in the third quarter. It earned $148 million, or 26 cents a share, in the same quarter last year.
Revenue last quarter fell 6 percent to $6.2 billion.
"The third quarter was undoubtedly challenging for all global companies, including those in the automotive sector," said Alan Dawes, Delphi's chief financial officer.
Lower earnings resulted from lower auto production levels in North America, Europe and South America and weak sales of after-market parts, he said.
Added logistics and manufacturing costs because of the Sept. 11 terrorist attacks and canceled orders following the attacks also hurt production, he said.
Cutbacks: Dawes said the company is focused on improving cash flow by reducing structural costs, managing working capital, limiting capital improvement spending and accelerating global restructuring plans.
Restructuring includes closing plants and laying off workers. In the third quarter, the company cut 3,700 jobs, which made 8,500 so far this year.
Delphi expects to cut an additional 1,000 to 1,500 employees later this year.
It said earlier this year that the restructuring plan would cut 11,500 jobs as it closed plants and left joint ventures. Delphi has 198,000 employees worldwide.
Local impact: In the Mahoning Valley, Packard is waiting until January to say how many hourly and salaried jobs have been cut this year, but employment levels are steady now, said Ann Cornell, a Packard spokeswoman. The maker of wiring harnesses and related components employs about 7,000 in the Warren area.
Cornell said Packard is continually looking at ways to streamline production, reduce waste and consolidate work.
For the fourth quarter, Delphi said it expects revenues of between $6.3 billion and $6.5 billion. Earnings are expected to be between $30 million and $85 million, or 5 cents to 15 cents a share.
The company said it was able to meet all of its orders despite unusual steps that had to be taken in shipping and manufacturing after the Sept. 11 attacks.
Mark Lorenz, vice president of operations and logistics, credited the company's lean manufacturing techniques, including producing parts in small lots.
shilling@vindy.com