Delphi dumping unprofitable contracts with GM

It's been a year since Delphi filed for Chapter 11 bankruptcy protection, and the supplier is still trying to find ways to return to profitability. One of the things it's identified as a way to get back into the black is ridding themselves of unprofitable contracts with General Motors. They have been quietly shifting some of these orders to outside firms. One example is the contract for GM full-sized pickup truck steering knuckles that recently went to EaglePicher Corp., which is no stranger to Chapter 11 itself.

Delphi also dumped the contract to build catalytic converters for GM's new pickups, which still had three years on it, according to UAW Local 1866 president Skip Dziedzic, in Milwaukee. No firm has been identified in taking over that order yet.

Besides shifting some of these unprofitable parts-making contracts, Delphi is also offering thousands of hourly workers early retirement, with GM's financial backing. And Delphi also wants to unload eight of its 29 U.S. factories to focus on more profitable electronic components.

A total of 5,472 unprofitable GM parts contracts are being let go as part of the restructuring, but General Motors is trying to block this plan. GM itself, however, has been actively shifting some Delphi contracts to other suppliers, as well, such as in the case of Siemens VDO Automotive Corp. making the manifolds for GM's new large SUVs, slip control systems for Epsilon cars from TRW, and four separate suppliers to make spark plugs: Denso Corp., Beru AG, NGK and Honeywell International Inc., all of which were previously produced by Delphi.

[Source: Automotive News, sub req]

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