Detroit Free Press, October 7, 2009, Wednesday

Detroit Free Press

October 7, 2009, Wednesday

Detroit Free Press

After 4 years, Delphi emerges from Chap. 11

TROY — Delphi Corp. has closed the deal with General Motors Co. and its lenders that has ushered the auto parts supplier out of bankruptcy after four years in Chapter 11.

The auto parts supplier, now known as Delphi Holdings LLP said Tuesday it acquired most of the old company’s core businesses as part of the restructuring plan.

CEO ‘grateful’ for support

“We are grateful for the support and loyalty of our customers, who have placed their trust in Delphi’s ability to provide world-class products and uninterrupted supply, and the support of our suppliers who have contributed broadly to our efforts,” said Delphi CEO Rodney O’Neal.

Delphi, which filed for bankruptcy on Oct. 8, 2005, will be a much smaller company going forward, having shed tens of thousands of workers, and dozens of plants, particularly in the United States.

From 44 plants to 4

Delphi entered bankruptcy with 44 U.S. plants and expects to have only four U.S. plants when it emerges. One of those also will be shutting down by the end of the year. When it filed for bankruptcy, Delphi employed 50,600 in the United States. That dwindled to 14,000 as of June.

Delphi’s bankruptcy dragged on through most of 2009 because of the credit crunch. In April last year, a key $2.5 billion investment fell through at the last minute, derailing the company’s plan back then to emerge from Chapter 11.

During the course of its bankruptcy case, Delphi has changed from a catch-all supplier to a company that is now focused on electronics, powertrain systems and heating and cooling systems.

To narrow its business, Delphi has sold numerous businesses including interiors, steering bearings, exhaust, catalyst, suspension and brakes.

Delphi’s sales have shrunk from $23.4 billion in 2005 to $18 billion last year.

Emerging from bankruptcy will help Delphi win new contracts, but it also will be a milestone for GM, said Arthur Wheaton, a labor expert from Cornell University.

GM’s role

The automaker has booked
$12.5 billion in charges related to Delphi’s bankruptcy case. It also has taken over four Delphi plants and Delphi’s steering division, in exchange for a $2.25 billion investment Delphi needs to emerge from bankruptcy.

“It has been just constant turmoil,” said Art Reyes, president of United Auto Workers Local 651, which represents 900 workers at a former Delphi plant in Flint.

After Delphi scaled the fuel pump and instrument cluster plant down from 2,700 workers, the supplier transferred the operation to GM. Workers there went left one bankrupt company and were moved to another company on the brink of bankruptcy.

Reyes said workers at his plant have a better chance at future work with GM.