Top auto parts firm is cutting 11,500 jobs

Delphi's reduction in U.S. affects 7,600

three plants to close

March 30, 2001|By NEW YORK TIMES NEWS SERVICE

DETROIT - Delphi Automotive Systems Corp., the world's largest auto parts manufacturer, said yesterday that it will eliminate 11,500 jobs this year, mainly through attrition, and will close nine factories and distribution centers.

Delphi, which was spun off from General Motors Corp. two years ago and has 211,000 employees worldwide, also warned that it would break even or record a small loss in the first quarter and would take an after-tax charge of up to $400 million, instead of earning a substantial profit as financial analysts had expected.

J. T. Battenberg III, Delphi's chairman and chief executive, said the company's sales and profits were being hurt by slower auto production and by a shift in auto sales toward less-expensive cars with fewer high-profit electronic options.

Delphi will cut 7,600 positions in the United States, or 10 percent of the company's American work force, but Delphi has twice that many workers who are eligible to retire, said Alan S. Dawes, Delphi's chief financial officer.

The 7,600 American positions include 2,000 salaried jobs. Delphi already has 1,150 salaried workers who plan to retire this year and they are included in this number; it expects another 850 to accept retirement offers by mid-May, Dawes said.

The remaining American jobs being cut involve 5,600 hourly workers, most of whom are covered by Delphi's contract with the United Automobile Workers union.

That contract makes workers eligible to retire after 30 years of service regardless of age. But many workers entered the factories at age 18, straight out of high school, and are not ready to retire at 48.

Battenberg said Delphi probably would offer a retirement incentive similar to Chrysler's, which consists of $17,500 in cash and an additional $17,500 credit toward the purchase of a new car. Under the union contract, Delphi owes substantial compensation payments to workers who are actually laid off.

Delphi will eliminate another 3,900 jobs outside the United States. But the company has separately cut another 7,600 jobs in Mexico through attrition in recent months, Dawes said.

Most of the factories and other plants being closed will be overseas, however. Three American operations will be closed this year: one in Fort Defiance, Ariz., another in Saginaw, Mich., and a third in Robertsdale, Ala.

Union rules make it very difficult to close auto parts factories in the United States and transfer the workers to other factories, and laying off workers is very expensive.

Wall Street showed little reaction to the cutbacks. The company's shares gained 58 cents to close at $14.52 yesterday on the New York Stock Exchange.

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