By DEREK R. SMITH, Kokomo Tribune business writer
Plant 9 of Delphi Corp.'s Kokomo operations is on a short list of Electronics & Safety facilities to be closed by 2010, according to The Detroit News.
Kokomo Delphi spokeswoman Paula Angelo said Plant 9 has a small number of employees and no active manufacturing operations.
As Delphi Corp. looks to emerge from Chapter 11 bankruptcy reorganization, the supplier is considering sweeping changes to its Kokomo-based Electronics & Safety division, which it sees as crucial to its future, the News reported Wednesday.
The News said it had obtained an internal Delphi document that outlines possible restructuring plans for Delphi Electronics & Safety: closure of five U.S. plants and seven technical centers, elimination of unprofitable product lines and possible acquisition of rival Motorola Corp.'s automotive unit.
Kokomo is world headquarters for Delphi Electronics & Safety and home to about 5,200 of its 29,900 employees -- about 2,900 salaried and 2,300 hourly.
'Northstar'
The News said a confidential document outlining a plan, code named "Northstar," cites the restructuring of Delphi's Electronics & Safety division as crucial to the supplier's long-term goal of reorganization.
In its drive for "global dominance" of the auto electronics and safety markets, Delphi will pursue "aggressive cost reduction via product exits, site consolidation, and legacy labor cost reduction," the News reported.
Troy, Mich.-based Delphi, the nation's largest auto supplier, aims to "execute ruthless portfolio management" by focusing on "more winners, more exits," according to the News.
The memo obtained by the newspaper identifies five manufacturing sites for closure: Plant 9 in Kokomo; Flint East in Flint, Mich.; Milwaukee, Wis.; Vandalia, Ohio and Tucson, Ariz. Also on the list are plants in Ashimori, Japan and Liverpool, England, according to the News.
Also being considered are the "potential exits" of product lines ranging from anti-lock brakes to ignition systems, the News reported.
In addition, the plan calls for reducing the Electronics & Safety division's technical centers from 23 to 16, including eliminating the tech centers in Westfield, Ind. and Flint, Mich.
'Serious breach'
Delphi spokeswoman Claudia Baucus said the Delphi document obtained by the News is a confidential draft that does not necessarily reflect the supplier's current plans.
"The information in it is incomplete," Baucus said. "We consider this a very serious breach and are conducting an internal investigation."
Angelo said Delphi's investigation into the leaked document could lead to legal action.
She said no decisions have been made about the closure of specific Delphi sites.
"This is a draft of one option among many," Angelo said.
Protect E&S?
Delphi spun off of General Motors Corp. in 1999 and has six divisions.
Analysts have repeatedly told the Kokomo Tribune it makes sense for Delphi to place a higher value on Electronics & Safety -- which produces relatively complex components like integrated circuits, sensors and engine controllers -- than on divisions that produce basic parts that can be built more cheaply overseas.
Indiana officials are attempting to take advantage of the perceived importance of Kokomo-based Electronics & Safety.
Gov. Mitch Daniels traveled Monday morning to Troy to meet with Delphi Chairman and CEO Steve Miller, Daniels spokeswoman Jane Jankowski said.
The governor has been active in marketing Indiana -- and Kokomo in particular -- as a great place for the reorganized Delphi to do business.
"This was a serious business meeting for the governor," Jankowski said. "He wants to show that Indiana is the best place for Delphi to be, invest and grow."
CEO lauds Kokomo
Miller spoke highly of the Kokomo operations when he visited in September.
"We still have market-leading technologies," Miller said in Kokomo. "That's why we have a large salaried and engineering employment base here. Hopefully, we can retain the bulk of that employment."
Delphi filed for Chapter 11 bankruptcy protection last month after failing to reach an agreement with the United Auto Workers and GM. Delphi executives contend the company's wage structure is globally uncompetitive.
Delphi reportedly is seeking wage cuts of more than 60 percent, significantly higher worker health care costs and other concessions.