Delphi Corp., the U.S. auto-parts supplier that filed for Chapter 11 bankruptcy protection Saturday, plans to shut down or sell off a substantial part of its U.S. operations, the Wall Street Journal reported Monday.
But Delphi Chief Executive Robert “Steve” Miller told the Journal in an interview he was not sure if the company would ask the U.S. government to take over its pension obligations.
Miller said Delphi’s troubles would require the company to divest, consolidate or close “a substantial segment” of its 45 manufacturing sites in the U.S. and Canada, which employ 49,000 workers.
He said he also plans to renegotiate the contracts and retirement plans of Delphi’s 33,000 union workers and 12,000 retirees, the paper reported.
In its filing, Troy, Michigan-based Delphi did not detail which or how many U.S. plants it hopes to get rid of. The company previously identified 11 U.S. plants that were unprofitable and could be closed or sold.
The filing in bankruptcy court is the latest sign that the U.S. auto industry’s unionized workers face painful restructuring efforts forced on airline and steel workers amid bankruptcies in those industries, the Journal said.
The filing also could disrupt the flow of auto parts, force major concessions on the United Auto Workers and load more costs on cash-strapped auto makers. General Motors Corp. the former parent of Delphi, is especially vulnerable because it guaranteed benefits of some Delphi workers when it spun the company off in 1999.
Analysts estimated GM’s obligation for retiree benefits at somewhere between $1.6 billion and $6.6 billion. The company’s tab for retiree pensions could run another $3 billion to $4.5 billion if Delphi terminates its plan, the Journal said.
UAW President Ron Gettelfinger in a statement called the filing a “bitter pill” and criticized Delphi for sweetening the severance packages of 21 top executives the day before seeking bankruptcy protection.
Meanwhile, Delphi seeks relief from the bankruptcy court, including permission to cut hourly wages.
The paper also said Delphi is moving John Sheehan from chief operating officer to chief restructuring officer. Robert Dellinger will become chief financial officer, effective immediately.
