DELPHI CORP. Report: Promising, but not a done deal

No Delphi local plants are listed among those to be closed.
THE VINDICATOR
By DON SHILLING
VINDICATOR BUSINESS EDITOR
The cornerstone of Delphi Corp.'s reorganization efforts is a division that includes its Mahoning Valley operations, an internal memo says.
The document obtained by The Detroit News spells out some proposed cuts but says Delphi Corp. would look for growth from its Electronics & amp; Safety unit when it emerges from bankruptcy protection.
The report doesn't mention Delphi Packard Electric Systems, but the Warren-based maker of wiring harnesses and related components is a key part of the Electronics & amp; Safety unit.
The newspaper reported Wednesday that Delphi is pursuing "global dominance" of the auto electronics and safety markets.
The report is promising for Packard and the Mahoning Valley, said Reid Dulberger, executive vice president of the Regional Chamber.
No local plants are mentioned for closing in the memo, and the product lines that are said to be in jeopardy are not located here for the most part.
Dulberger cautioned, however, that the memo isn't necessarily Delphi's final plan. Delphi doesn't intend to finalize its restructuring plan until 2007.
"We have a long way to go before we know exactly and accurately what Delphi intends to do," Dulberger said.
Still, the emphasis on growth in the Electronics & amp; Safety division would make sense, he said.
Delphi's financial reports show that this division is the only profitable division, plus it is growing the fastest and is least dependent on sales from General Motors Corp., Delphi's former parent company.
The memo says some of the growth in the Electronics & amp; Safety division could come from Delphi buying Motorola's automotive electronics unit, which had $1.7 billion in sales last year.
Despite growth plans, Delphi's still intends to cut costs by eliminating products, consolidating plants and lowering labor costs, the memo says.
'Exit' list
Plants on an "exit" list are in Flint, Mich.; Kokomo, Ind.; Milwaukee; Tucson, Ariz.; Vandalia, Ohio, near Dayton; Ashimori, Japan; and Liverpool, England. The memo says Delphi also plans to close seven of the 23 technical centers in the Electronics & amp; Safety unit.
It adds that Delphi is considering getting rid of product lines that include ignition systems, air meters, anti-lock brakes, steering controllers, suspension components and instrumentation products.
Those businesses account for $131 million in annual revenue but are expected to lose nearly $20 million next year, the memo says.
Packard does some ignition work locally, but Dulberger said he doesn't think that was the work mentioned in the memo.
In recent years, Packard has invested tens of millions of dollars in Mahoning Valley operations to upgrade its production of plastic parts, metal parts and cable. Other components produced locally included electrical centers and sensors.
In this area, Packard has about 1,300 salaried workers and 3,800 hourly workers who are represented by the International Union of Electrical Workers.
The hourly workers were shaken last week when union officials told them Delphi wants to cut its IUE work force from 8,500 to 3,000. Delphi also has proposed cutting production workers' hourly pay from $27 to $10 and slashing benefits.
Karen Healy, a Delphi spokeswoman, told The Detroit News that the memo was a draft document of possible options for the Electronics & amp; Safety division. "Lots of options are under consideration" as the Troy, Mich.-based company tries to reorganize in bankruptcy court, she said.
Huge growth anticipated
While the Electronics & amp; Safety division accounts for just one-fifth of Delphi's total revenues, the memo identifies it as a critical part of the company's future. The plan projects growth in the unit's annual revenues from $5.8 million now to $8.5 billion by 2010. Delphi's total revenues are $28 billion a year.
The newspaper said GM accounts for 45.5 percent of the division's revenues, but the division expects that to fall to 35.3 percent by 2010.
The Electronics & amp; Safety division reported operating income of $1 billion last year and $340 million in the first half of this year. The other major Delphi division -- Dynamics, Propulsion, Thermal & amp; Interior -- had an operating loss of $21 million last year and $340 million in the first half of this year.
Delphi has 10 plants in its Automotive Holdings Group, which are struggling plants the company is trying to fix, close or sell. This group posted an operating loss of $586 million last year and $527 million in the first half of 2005.
shilling@vindy.com