Delphi Automotive Systems will stick with its plans to expand in China, South Korea and elsewhere in Asia, even though its near-term earnings will suffer significantly from currency devaluations throughout the region.

That's the word from Delphi President J.T. Battenberg III in a WAW inerview. He declines, however, to discuss a strike that began June 11 at a Delphi parts plant in Flint, MI, which had a domino effect on GM's sprawling North American Operations.

Last year $2 billion, or about 8%, of Delphi's $26.3 billion in worldwide revenue came from its Asia-Pacific operations. This year that contribution will be much lower, although Mr. Battenberg declines to say how much because currency fluctuations change the number almost daily.

"The crisis is real. Volumes are well below industry forecasts," Mr. Battenberg acknowledges.

Delphi produces a wide range of components in Asia through 19 joint ventures and 10 wholly owned plants.

But sales of cars and trucks throughout Asia are plummeting, and no one knows where the bottom may be. Car sales in strife-torn Indonesia through the first half of this year are down more than 70%.

Beyond that, global suppliers already doing business in the region are being bludgeoned by the continued decline of nearly every major nation's currency.

With the clarity of a professor teaching an introductory class in international economics, Mr. Battenberg explains how it has affected Delphi:

"We do over $1 billion of business a year in Korea," he says. "That business last year was translated at the rate of 800 (Korean) won to the dollar. If you made sales of 800 won, you reported $1 of sales back to the U.S. Or if you made 800 won of profit, you reported $1 of profit back the U.S."

In less than four months spanning late 1997 and early 1998, the won lost more than half its value, plunging to where it took 1,800 won to equal a dollar.

Suddenly that dollar of earnings is worth only 50 cents. Not only do sales drop because the number of vehicles sold is going down, revenues also skid because the exchange rate is weakening.

"If your long-term strategy is to be there, and your fundamental operations are solid in the local currency, that's okay," Mr. Battenberg. "You're just going to have to get hammered when you report back under U.S. standard accounting practices."

China is of particular concern to Delphi executives. It is where they have invested more than $300 million on about a dozen joint ventures and one wholly-owned parts plant. Through the first two months of this year, based on data from Xinhua News Agency, total vehicle sales in China have fallen 9%. Sales of Volkswagen Shanghai, Delphi's largest customer in China, were down 12% in that January-February period.

At least through late June, the Chinese government had not devalued the country's currency, known as the yuan, or renminbi. But U.S. officials have worried that if other Asian currencies, especially the Japanese yen, continue to fall, Premier Jiang Zemin could allow the yuan to drop as well.

On the flip side, devalued currencies mean lower labor costs and lower prices for existing parts operations that might be for sale.

"Now a dollar buys twice as much," Mr. Battenberg says. "We don't have announcements to make, but we are negotiating on several fronts."

But another alternative that looks good on paper - keep running your lower-cost Asia plants and exporting more of their output back to Europe and North America - is a lot tougher in reality.

"We certainly try to do some of that, but, quite frankly, there are offsetting costs of tariffs and logistics," he says. "It's not as brilliant an idea as it first seems. Secondly, it's very difficult to get money in Asia right now. Banks don't want to lend."

With the Asian economic crisis and Delphi's ongoing struggle to improve productivity in its larger U.S. operations - such as the striking Energy & Engine Management plant in Flint - it could be sooner than later before it proceeds with an initial public offering (IPO) to sell up to 20% of its equity to investors.

Mr. Battenberg declines to discuss the strike at its Delphi East plant. About 5,800 hourly workers there make spark plugs, fuel and air filters and speedometers. It is one of Delphi's least competitive factories.

Worldwide, Delphi's profit margins are running between 3% and 3.5% of sales, well below General Motors Corp. Chairman John F. (Jack) Smith's goal of 5%. Other large suppliers, such at ITT Industries and AlliedSignal, are earning more than that, but they are still selling most of their automotive operations because they are not profitable enough.

"Delphi's long-term objective is still to have an IPO," Mr. Battenberg says. "Europe is doing very well. The U.S. has been strong. That's one of the advantages of being a global player. People who invest in global companies understand the risks. You have to know what you're getting into."