Delphi may need to close some U.S. plants -CEO


TROY, Mich., Aug 15 (Reuters) - Struggling auto parts supplier Delphi Corp. may need to close some high-wage U.S. plants to turn around its operations, Chief Executive Robert "Steve" Miller said on Monday.

Delphi, the largest U.S. auto parts supplier, has said it would consider filing for bankruptcy protection in its U.S. operations if former parent General Motors Corp. and the United Auto Workers union do not help it cut high labor costs.

"Plant closures are a theoretical possibility, there are some plants that we may not be able to sustain ...," Miller told reporters at a reception at Delphi headquarters in Troy.

Parts with relatively high technological input, relatively high material costs, competitive labor costs and that are hard to ship will probably always be made in the U.S., Miller said.

"At the other extreme there are things that are high labor content, very easy to transport that are going to be priced based on the labor cost of low-cost countries," Miller said.

"We have to go through it part by part by part by part, before you can figure out what has a permanent home in America. What has the right labor cost, and what things inevitably will be sourced overseas."

Under the terms of its spinoff from GM in 1999, Delphi has a large unionized U.S. work force that is paid at an automaker wage and benefit rate, instead of the much lower rate that is standard for auto parts suppliers. Delphi also pays about 4,000 workers who are idle, logging about $100 million per quarter.

"Plants that have $65 or $75 an hour all-in labor costs are not viable long term, we need to deal with that and find a way around it," Miller said. "A large number of our plants are viable if they had the same competitive wage and benefit package that any other supplier has."

Miller declined to say exactly what Delphi was seeking from GM and the UAW to reduce its wage and benefit costs. He said it would be better accomplished out of court, but Chapter 11 filings are not the end of the world.

Delphi has not set a deadline for reaching a deal with GM and the UAW, but Miller has said new U.S. bankruptcy laws effective in October potentially may be harder on debtors and expose them to as yet undetermined legal interpretations.



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