Delphi Corp. unveiled a dramatic restructuring plan today that calls for closing or selling 21 of 29 U.S. plants. The Lockport Thermal and Interior plant is among those staying open, the company said.
The reorganization plan being unveiled in bankruptcy court, and reported today by the Detroit News, reveals the scope of the overhaul of the nation's largest auto parts maker. Among the plants to remain open are Rochester, Grand Rapids, Mich.; Kokomo, Indiana; and Warren and Vandalia, Ohio.
The Lockport Thermal and Interior plant employs 3,800, making it the largest manufacturing employer in the region. The plant makes heating and cooling equipment and the large consoles that hold them.
The company is also asking the judge to allow it to slash as many as 8,500 people, or 25 percent of the company's global salaried work force, Delphi said. The cuts should help reduce selling, general and administrative expenses by $450 million per year. Delphi will also slash its number of corporate officers by 40 percent.
Across the U.S., Delphi has 29 plants that employ 33,000 people. Workers at 14 plants slated to close are all represented by the UAW. In addition, some of the other plants represented by other unions may close or be sold, according to local union officials who spoke to the Detroit News after being briefed this week by UAW Vice President Richard Shoemaker. Worldwide, Delphi employs 185,000 workers, including more than 60,000 in Mexico.
Spokesmen for the UAW International and Delphi declined to comment to the Detroit News Thursday on the potential plant closings.
The closing plan comes to light on the day Delphi asked a bankruptcy court judge to void its labor contracts. Delphi has insisted it must cut wages as part of its restructuring plan.
The company had proposed cutting wages from $27 a hour to $16.50, but that offer was discussed before the plant closings were unveiled.
Under the plan, Delphi will focus on building automotive electronics and fuel systems in the U.S., but not spark plugs or catalytic converters and other lower margin parts.
Shoemaker said Delphi had identified a small range of automotive parts it will continue building in the U.S. -- automotive fuel systems and emissions controls in Rochester; radiators, oil coolers, condensers, evaporators and HVAC units in Lockport; engine components in Grand Rapids; and engine and transmission controls in Kokomo, the Detroit News said.
UAW Local 1866 Chairman Mark Bickler advised workers to begin thinking about their future beyond Delphi. "Take this information that is presented today as very serious, as every member working at this plant will have to make a life-altering decision."
The UAW has said it would consider a strike if the bankruptcy court voids its labor contracts. However, how the UAW will react to the proposed plant closings is not known.
Delphi, which filed for bankruptcy in October, has been open about its plans to cut its labor costs. The company said it is not competitive in the global market paying wages that it inherited when Delphi spun off from GM in 1999.
In its Chapter 11 filing, Delphi said it would attempt to divest, sell or wind down a "substantial segment" of its U.S. manufacturing operations.
"We took this action because we are determined to achieve competitiveness for Delphi's core U.S. operations, and the key to accomplishing that goal is reducing these costs as soon as possible," Delphi Chairman and CEO Steve Miller said in an Oct. 8 statement in the bankruptcy filing.
The health of the U.S. automotive industry is an overarching concern in Western New York, where about 10,400 people work in automotive plants and thousands more work in smaller companies that supply them.
In addition to the 3,800 Delphi workers, GM employs 2,500 at its Powertrain plant in the Town of Tonawanda, about 1,500 people work at Ford Motor Co.'s Buffalo Stamping Plant in Hamburg, and 2,600 work at the American Axle & Manufacturing plants in Buffalo, Cheektowaga and the Town of Tonawanda.