[caption id="attachment_217" align="alignleft" width="300" caption="Electronics development in Kokomo, IN, is key to potential growth for Delphi in U.S."]
KokomoElect
[/caption]If an automotive supplier had 44 plants in 38 U.S. cities prior to bankruptcy and now has only four, can that company rightfully declare it has an “unmatched global footprint?”
That’s the question I posed to Rodney O’Neal, CEO and president of Delphi, after he made the claim during a press conference at the recent Frankfurt auto show.
He responded that the Troy, MI, supplier, as a result of restructuring that ended a 4-year bankruptcy case in 2009, is positioned much like its competitors in core product segments such as safety, powertrain, thermal and electrical/electronic systems.
“Our manufacturing footprint is reflective of what the market demands in terms of cost, quality and delivery,” O’Neal says. “What gets produced in the U.S. has to make sense … to our customers and to the end consumers.”
O’Neal encourages comparisons with Delphi’s competitors. A quick straw poll finds 20 U.S. plants for Michigan-based TRW, 17 for Japan-based Denso, nine for German-based Continental and 21 U.S. facilities (both manufacturing and engineering) for Germany’s Robert Bosch. All three companies compete with Delphi in certain sectors.
This all might sound like a mere quibble over semantics, but the “unmatched global footprint” remark didn’t sit well as I thought about the tens of thousands of Americans who are no longer part of that footprint or lost compensation or benefits as a result of Delphi’s downsizing.
This past spring, Delphi made a presentation to investors that played up the company’s “low-cost footprint,” as well as some company statistics only a bean-counter could appreciate: U.S. workforce reduced from 46,000 to 5,000; 91% of hourly workers in low-cost countries; sold 11 business units and closed 41 sites.
As of January, Delphi had 110,555 hourly workers worldwide. Of those 38% were in Mexico, 27% in low-cost (Eastern) Europe and 1% in the U.S.
Is it odd that a company proclaiming how small it’s become also can trumpet its “unmatched global footprint,” depending on the audience?
Delphi had lots of baggage when it separated from General Motors in 1999. It had too many workers and plants, and hourly U.S. wages were too high to compete with other non-union suppliers.
Delphi had 39,000 hourly workers represented by the United Auto Workers Union in 1999. Today, the union represents none of the 5,000 U.S. hourly workers.
Of course, Delphi couldn’t compete by paying its U.S. hourly workers twice as much as rivals. The model was unsustainable, and something had to be done.
The solution was to systematically dismantle the U.S. operations by giving some back to GM or selling or shutting them down.
Nowhere in the world was the downsizing more brutal than in the U.S. While Delphi’s home market has only four manufacturing sites (as well as many engineers and executives), Mexico has 32 sites. Across eastern and western Europe, Delphi has 47,000 employees, most of them working at 40 plants.
One could argue Delphi largely has abandoned its home market as it seeks lower labor costs elsewhere. One also could argue that this strategy saved the company and a handful of precious jobs in the U.S.
Recent developments, such as the opening of a Delphi power electronics plant in Kokomo, IN, suggest the supplier is slowly on the path to rebuilding. Kokomo is vitally important to Delphi because it serves as the hub for product development in electronics, arguably the supplier’s brightest sector.
True, Delphi handed back to GM an electronics manufacturing operation in Kokomo that employed more than 8,000 people at the time of Delphi’s spin-off.
But with a few more contracts potentially creating the need for additional facilities and personnel in the U.S., perhaps Delphi legitimately can claim an “unmatched global footprint” someday.
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