First Aid for Ailing Delphi Plants

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated, Houston, Texas). Delphi Corporation (NYSE: DPH) (Troy, Michigan) has formed a recovery unit for its financially-challenged plants, which it calls the Automotive Holdings Group (AHG). The group, formed in October 2002, and headed by James A. Bertrand, President, is effectively an intensive care unit for plants that are losing money for the company. Delphi will provide a management team to work with each plant, in order to bring financial performance up to acceptable levels. In a letter delivered to some of the plants earmarked for "membership" in this unit, Delphi stated that "movement to the group signals intense focus on operating performance, [although] it does not necessarily mean elimination or separation from the company." In other words, this is the final proving ground, with a shape-up-or-ship-out agenda.

Click on the image at right to view Delphi's Automotive Holding Group Plants Table.

Alan S. Dawes, Vice Chairman and CFO of Delphi, to whom Mr. Bertrand answers, has stated that the purpose of the group is to help management, employees, and unions "fix the business," but if it cannot be fixed (i.e., raised to acceptable performance levels), then AHG will need to consider whether to close or sell the plant. Each plant will be dealt with on an individual basis. Mr. Dawes stressed that inclusion in this group will in no way affect production or product quality from the concerned plants, since Delphi is completely committed to supplying its customers with quality goods in a timely fashion. It simply means that the plant will be intensely focused on cost-reduction and getting the plant back into the black. Although Delphi showed a healthy profit last year, it can no longer afford to keep the unprofitable plants afloat.

The first group of plants to be moved to AHG were the generator and instrumentation product manufacturing plants in Flint, Michigan, and Anderson, Indiana. Among the latest plants to join AHG were those located in Athens and Tuscaloosa, Alabama; Anaheim, California; Fitzgerald, Georgia; Anderson, Indiana; Olathe, Kansas; Flint, Michigan (East); New Brunswick, New Jersey; and Moraine and Dayton, Ohio (2 each).

The concerned sites employ approximately 11,800 workers, and manufacture a large range of automotive products, from batteries to generators, instrumentation and thermal products to air conditioning compressors, and more - Delphi makes just about everything that goes into an automobile. Delphi intends to report the financial performance of the new unit beginning first quarter 2003. Industrial Information Resources tracks these plants.