The Buffalo News, May 5, 2009, Tuesday

The Buffalo News

May 5, 2009, Tuesday

The Buffalo News

Schumer wants return of Delphi plants to GM
Says move would save many endangered jobs

With Delphi Corp. facing a deadline to show how it will emerge from bankruptcy, Sen. Charles E. Schumer on Monday called for General Motors Corp. to buy plants in Lockport and three other cities from the struggling auto parts maker.

Schumer urged the firms to work out a deal that would let GM buy Delphi manufacturing plants in the Town of Lockport, Rochester, Indiana and Michigan and, he contends, preserve the plants and the thousands of jobs they support.

“Delphi’s in bankruptcy . . . If Delphi were just to go under, these jobs could be in jeopardy,” Schumer, who spoke at a Rochester news conference Monday, told The News in an interview.

GM has spent hundreds of millions of dollars since 2005 propping up Delphi, a vital parts supplier, and Schumer’s comments come as the automaker faces the prospect of its own bankruptcy filing.

GM and Delphi have discussed the idea, a move that would face approval by federal authorities and Delphi’s debt holders.

“This one actually might get a warm reception, because whatever they pay for these four would be less than they’d pay” to keep Delphi from going under, said Art Wheaton, director of labor studies at Cornell University’s School of Industrial and Labor Relations in Buffalo.

The Delphi plant in Lockport, which employs 2,100 people as an economic anchor for the region, operated for years as Harrison Radiator under the ownership of General Motors.

The Upper Mountain Road plant factory makes thermal products for cars and trucks.

GM spun off Delphi, including the Lockport facility, as an independent firm in 1999.

Delphi has struggled ever since to be profitable. Delphi operated 33 plants in this country at the time of its October 2005 bankruptcy filing, a number that has fallen to 12 today.

The plants in Lockport; Rochester; Kokomo, Ind.; and Grand Rapids, Mich., are Delphi’s core facilities, and suppliers for GM.

It makes sense for GM to buy the plants — saving itself money now spent to prop up Delphi and ensuring its supply chain—even though GM is itself on the verge of a possible bankruptcy filing, Wheaton said.

GM bought $5.5 billion worth of parts from Delphi in 2008, accounting for 31 percent of Delphi’s revenue, according to Crain’s Detroit Business.

The fate of the plants and the jobs they support would be stronger under GM than under Delphi, Schumer said.

Schumer said he was contacted by area representatives of the United Auto Workers and asked to support this proposal. The senator said he talked to the federal auto czar, Ed Montgomery, and he favored the plan.

Schumer said he hasn’t heard back from GM or Delphi. A GM spokeswoman did not return phone calls seeking comment.

Delphi had faced a Monday deadline to present a revised plan indicating how it intends to emerge from bankruptcy.

“What they thought would be a relatively quick bankruptcy has turned into a 4z-or 5-year nightmare,” Wheaton said.

Delphi is in negotiations with GM, the U. S. Treasury Department and the financial firms that hold its debt and soon will issue a document detailing GM’s overall future role within the parts maker, Delphi spokesman Lindsey Williams said.

The talks include the possibility of GM buying Delphi plants.

“These are ongoing discussions,” he said. “It’s a multi-dimensional discussion that is complex in nature.”

swatson@buffnews.com