We have it from an insider that the bankrupt parts supplier Delphi is about to "downsize" its domestic ops. Not that it'll do them much good. Now that Appaloosa Investments and Friends bailed-out of Delphi's bail-out plan, the former GM division is on its last life. Although Delphi's suing its jilters, what are the odds that a judge can/will force Appaloosa to fork over the billions the money men didn't leave on the table? At best, more money will be lost on lawyers, all 'round. All of which means a Delphi Chapter 7 is just over the event horizon. GM will have to buy up (back) the Delphi bits it needs to keep building vehicles. And as GM's August 8th SEC filing points out, "In addition the Benefit Guarantees may be triggered which would result in additional liabilities to us. We may also be subject to additional litigation regarding Delphi." The flames of GM's cash conflagration continue… [thanks to you-know-who-you-are for the tip]
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Will my Del-co parts have a warranty?
Delphi is currently offering 38 jobs in the United States…
http://delphi.appone.com/menu.asp?ClientID=216&Top=&Target=&SearchText=&KeyType=all&CatID=0&CountryID=38&StateID=0&DivisionID=0&x=37&y=10&AdCode=
Rumors I have heard:
1 – 500 salaried gone by the end of the year. Not known if that is the total for the year or from now until the end of the year.
2 – 20 to 40% of salaried folks gone by the end of the year. Not known if that is the total for the year or from now until the end of the year.
Not a pleasant place to be. If they go chapter 7 because they can’t get out of chapter 11, GM will follow soon afterwards if they do not jump on the divisions they need to stay in business.
The problem is this – Delphi has divested itself so that they have customers in almost every car company. If GM or any of the others scoops up the divisions they need that the other car makers also need, someone else is going to be short of parts, have to shut down production and have their bottom line take a hit. It’s going to get very ugly and some companies will have a real hard time getting past a Delphi chapter 7.
Most of the salaried folks who have been shown the door are given time to look elsewhere in the company to find a job (~45 days). When you’re tapped, you are out by the end of the quarter. With the end of the 3rd quarter being 30 September, 45 days before that is ~15 August, this coming Friday. Good chance that this WAR has teeth and they will be plunged in some very good peoples’ backsides.
@ jolo:
Great comments. I agree with most of your thoughts. However, I think Delphi will continue to supply all of their customers, even if GM (or another) picks up the pieces after Chapter 7. Customers equal cash, something that Delphi sorely needs.
ANY of the automobile manufacturers – Toyota included – which haven’t made contingency plans re: a chapter 7 event for Delphi, deserve the money losing temporary shut-downs that will inevitably result.
My WAG (wild-ass-guess) is that GM is the one company which hasn’t made contingency plans. Partly, because the management live in la-la-land and don’t even remotely believe that either Delphi or GM will ever go Chapter 7, dead as a dodo. (Guess again, guys).
As mentioned, Delphi pretty well sell “some” products to virtually all car manufacturers.
More likely than a car manufacturer buying up bits of Delphi (then starving competitors by unilaterally killing valid contracts to supply parts), is competing companies such as Bosch, Magna International and Aisin, for 3 examples, buying up plants and contracts out of the wreckage.
If a car company bought Delphi plants and refused to honor contracts for competitor parts, the liars/lawyers would be on their necks like the blood sucking vampires that they truly are. Stat.
If its Friday, it’s layoff day in Detroit. This isn’t wild. It’s now, sadly, business as usual. There have been mass layoffs for years, there will be more to come.
star_gazer, there was a rumor years ago that Delphi would be absorbed back into GM, just before Delphi filed for chapter 11. Their customers outside of GM threatened to pull all their contracts if that happened for the same reason Delco/Delphi could not get any business when they were part of GM. The other companies did not trust GM and it would use Delco to spy on their upcoming projects. That was one of the main reasons Delphi wanted to spin off of GM, to get more non-GM business, which they were doing, but not fast enough to stay afloat.
If GM pulls Delphi back if Delphi goes chapter 7, look to see contracts get slashed and GM will have to absorb the losses that Delphi will incur.
I wondered about Delphi when the very first thing they did when they were established was to build a huge shiny new headquarters building. Forget that silly stuff about trying to make some money, first priority is ordering some nice new classy office furniture.
I’ll let you know if I have a job on Monday.
@ 1996MEdition
Same here….