The Buffalo News, February 10, 2009, Tuesday

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The Buffalo News

February 10, 2009, Tuesday

HEADLINE: GM reportedly mulls reclaiming parts of Delphi; Observers say that the move could benefit Lockport plant

BYLINE: By Matt Glynn - NEWS BUSINESS REPORTER

BODY:
General Motors Corp. is in talks to take back parts of Delphi Corp., which could affect who runs Delphi's plant in the Town of Lockport.

Delphi employs about 2,100 hourly and salaried people at the Upper Mountain Road factory, which makes thermal products for cars and trucks.

News that GM is talking about reclaiming parts of Michigan-based Delphi was disclosed by people familiar with the talks who declined to be identified. One report suggested GM could take back as many as five of Delphi's U.S. plants.

Local observers of the auto industry say Delphi's Lockport plant would benefit from switching back to GM affilia-tion.

"It would help their stability," said Art Wheaton, director of labor studies at Cornell University's School of Industrial and Labor Relations in Buffalo. With GM already operating an engine plant in the Town of Tonawanda, he said, it would create the opportunity for workers to flow between those two sites as needed.

While GM is in dire shape, the U.S. operations of Delphi have been in Chapter 11 bankruptcy since October 2005 and have struggled to emerge. "Financing has dried up completely," Wheaton said.

GM is trying to meet a Feb. 17 deadline to submit a viability plan to the government to secure additional loans. At the same time, the automaker wants to ensure a supplier like Delphi will be able to survive and keep churning out parts for its cars and trucks, Wheaton said.

"I don't think anybody's going to try to go the mat to save Delphi in Washington, D.C.," he said.

Nallan Suresh, chairman and professor of operations management and strategy at the University at Buffalo's School of Management, said such a "reverse spinoff" idea reflects the struggles the auto industry's supply chain are facing. GM a decade ago spun off Delphi into an independent company.

"In terms of local impact, the good news is that this may not lead to major loss of jobs, but merely a transfer of ownership of parts of the chain from Delphi to GM, and I think the employment picture in Western New York in this sector will not change much," Suresh said in an email interview. "But then up to five Delphi plants may come under GM again, and that does represent a significant structural change."

GM and Delphi representatives declined to comment on the reports, and a United Auto Workers leader at the Del-phi plant could not be reached.

GM has had the option to take back factories in its 1999 agreement to spin off Delphi as an independent parts supplier. Delphi plants make thousands of key parts for GM's vehicles including its top selling pickup trucks, the Chevrolet Silverado and GMC Sierra.
The interests of the two companies remain intertwined because Delphi is GM's biggest supplier, providing more than 1,000 parts for GM pickup trucks.

Delphi's Lockport plant is a vital source of jobs in the region, but the size of its work force has declined; it had about 6,200 workers at the time of the spinoff.
The Associated Press contributed to this report.
e-mail: mglynn@buffnews.com

GRAPHIC: Sharon Cantillon/Buffalo News file photo If General Motors Corp. were to take ownership of some of Delphi Corp.'s plants, it could help stabilize the auto parts maker.

LOAD-DATE: February 10, 2009