By SCOTT SMITH, Kokomo Tribune staff writer
scott.smith@kokomotribune.com
Delphi Electronics & Safety officials confirmed Wednesday an additional 81 permanent layoffs of hourly production employees at the company's Kokomo-based Electronics & Safety division.
The layoffs come less than a week after the company announced it would vacate three areas of its Kokomo plant operations at the corner of Lincoln Road and U.S. 31, and as the company continues its struggle to emerge from bankruptcy protection.
Delphi Corp. spokesman Milton Beach said late Tuesday the company had begun the process of informing employees of the pending layoffs.
"You lose jobs because of competition and market conditions, and you close facilities as the result of losing jobs," Beach said. "These are permanent layoffs, based on reductions in customer orders."
The cuts will be made based on seniority. All of the employees to be placed on permanent layoff have been with the company since 2006, just after the company offered buyouts, retirement inducements or the possibility of transferring to a General Motors facility to about 2,200 hourly workers.
About 1,800 hourly workers left Delphi that year. That same year, Delphi hired about 1,100 hourly employees to replace the workers who had left through buyouts, retirement or GM transfers. The new hires, now comprising a majority of Delphi's hourly work force in Kokomo, were hired in at a wage just over half what the workers who left were making.
The new labor agreement allowing the changeover at Delphi was aimed at making the company more competitive as it emerged from bankruptcy, but earlier this year the financing package expected to allow Delphi to finalize its reorganization plan was withdrawn.
Kyle Morris, an hourly employee hired on in 2006 at $14.50 an hour, said he's concerned there will be more layoffs ahead.
"It's kind of sad when people you were working with for two years just up and lose their job. A lot of them are single parents and they don't have anything to go to," he said. "And we won't see them again."
Last week, when plans were announced to vacate Plant 9, Plant 10 and the Information Technology Center buildings at the Electronics & Safety campus, Delphi officials said about 950 employees, mostly salaried, would be moved to other buildings on the campus by year's end.
Kokomo hourly employees, who have seen their numbers halved since prior to the bankruptcy filing, took the announcement as another indication a round of layoffs was on the way.
One production line was still in operation at Plant 9, and that line is expected to be moved to another plant on the campus. Hourly production workers at the Kokomo campus produce integrated circuits, engine controllers, safety electronics, sensors and power electronics for hybrid and conventional vehicles.
Although still Kokomo's second-largest employer, Delphi has been trimming its local work force by about 400 employees per year for the past 10 years.
In mid-2003, two years prior to filing for bankruptcy, Delphi employed 6,300 in Kokomo. Today, its work force is about 4,000, including just over 1,300 hourly workers and 2,600 salaried. Beach said the company has "been making adjustments on a regular basis, based on what our customer orders are," in relation to the number of salaried employees in Kokomo but said he is not aware of any plans to reduce the salaried work force through attrition or other programs.
News of the layoffs also comes a week after General Motors, Delphi's largest customer, announced plans to further reduce truck production. GM has already taken a $7.5 billion charge related to Delphi, and North American auto manufacturers are predicting to sell about 14 million cars this year, about 2 million less than the previous year.
Kokomo financial adviser Gene Kostrewa said Delphi's situation is simply indicative of the general malaise affecting the auto industry, which has been worsened by the rising price of oil.
"It's a very big concern for everyone, in that we're in an auto town and we haven't been able to diversify into other areas," Kostrewa said Wednesday. "Even if you don't work at Delphi, you're not immune to this."
Kostrewa said Delphi's prospects for emerging from bankruptcy aren't good, given the state of the U.S. financial markets and the general tightening of credit.
Troy, Mich.-based Delphi filed suit against its former lead equity investor, Appaloosa Management, in May, after Appaloosa pulled out of a $2.55 billion investment deal in April.
Appaloosa had committed to investing as much as $1.08 billion under the plan, but its relationship with Delphi grew strained after the auto parts maker struggled to get $6.1 billion in loans that it needed to exit bankruptcy.
"The hard part now is where the money is going to come from," Kostrewa said. "The lenders have all pulled in their reins. Delphi's in a tough spot, I would think, in regards to finding another suitor, one with deep pockets and the belief that things are going to turn around in the auto industry."