News from the Tennessee Valley Business
SUNDAY, MAY 8, 2005

Bumpy ride for Delphi
Some workers concerned about plant's future

By Jay Wilson
DAILY Staff Writer 340-2440

Management said there is nothing new to talk about, but one Delphi worker said he's worried Limestone County's largest employer is stripping its gears.

Delphi Steering Systems' Limestone County facility supplies automotive parts to Ford, General Motors and, most recently, Hyundai.
DAILY File Photo by John Godbey
Delphi Steering Systems' Limestone County facility supplies automotive parts to Ford, General Motors and, most recently, Hyundai.
A third-shift employee approaching his 29th year with Delphi Steering Systems, Decatur's Tommy Sykes went home recently on a three-week layoff. Monday, he and fellow employees return as day workers.

"Department 50 — I think it was an assembly line — had the largest number of employees on third shift," Sykes said. "They moved them and others to day shift ... there's no third shift for that department, at least when I left."

Sykes said he has never seen General Motors or Delphi stock as low as recently, and with the company making what he considers unusual moves, he and his co-workers are worried.

"I tell you what — this is scary," said Sykes. "I hate to think the worst, but I hope the company is not considering something like bankruptcy."

Site Manager Curt Cargile said there is nothing new to consider. He said Delphi cuts or adds production as customer demands fluctuate. If customers need fewer parts, the auto-parts maker sends workers home and makes fewer parts.

"We'd like to see people go out and buy more cars so we could increase our production levels," Cargile said.

Plant officials have maneuvered for years, blaming a sluggish automobile market, higher raw-materials costs and inflated healthcare costs. These factors created fierce competition, company officials said.

"Business is extremely, extremely competitive," said Brad Jackson, Delphi spokesman.

In January, the facility began production of halfshafts for a recently built Hyundai plant near Montgomery. Delphi is a tier one supplier for Hyundai, meaning Delphi sells and delivers vehicle parts directly to the plant.

Hyundai spokeswoman Kathy Johnson said Delphi is supplying the drive shaft for Hyundai's 2006 NF Sonata. She was unable to comment on volume, but Delphi's original agreement called for 600,000 units by 2007. Sales to companies other than Ford and General Motors are crucial to Delphi's survival, according the Wall Street Journal.

Concern over meeting

Last week Limestone Commission Chairman David Seibert told commissioners the company asked the commission to hold its May 16 meeting at the plant.

"All I know is that it's concerning tax abatements, and they want to give the commissioners a tour," said Seibert.

Tom Hill, executive director of the Limestone County Economic Development Association, said Delphi wanted to make an announcement. He would not elaborate.

Jackson, the Delphi spokesman, said he knew of no meeting or announcement. He said the commission requested a conference room and he approved it.

"As far as I understand, there is no specific agenda, and none of our people are going to be there," Jackson said.

Several people close to the plant's operations said Delphi is adding equipment. Jackson said this is true, but he said he would not elaborate.

Jackson said Delphi purchases equipment for several reasons, but the No. 1 purpose is to increase efficiency. He said this could result in fewer operators but declined to comment or say how many employees could be laid off because of the equipment.

Lack of information

Meanwhile, Sykes continues to worry.

"Usually when information is being withheld, it's not good for the people it's being kept from," Sykes said. "We all feel like we're being kept in the dark about issues affecting our livelihood."

Sykes is vice president of the Decatur city school board, an organization he's served since 1989. He said Delphi has dropped almost all of its overtime and its entire third shift.

"We try to stay optimistic, but it's hard," he said.

Jackson said third-shift employees receive a premium payment, so moving them to day shift will save money.

Looking at history

For about five years, Delphi of Limestone County has operated amid rumors of layoffs and a possible shutdown. Jan. 22, 2001, the nation's largest auto supplier announced it would lay off 4,300 workers for one week. The company laid off most of these in Ohio, but about 350 local workers were affected.

Delphi struggled with temporary layoffs until the state got involved. Afraid of losing about 2,700 jobs, Alabama purchased plant 22 and 121 acres of land from Delphi. In return, Delphi agreed to invest $22 million in equipment. This equipment more efficiently produces halfshafts, a part that allows backward and forward movement in vehicles. This was September 2002.

At the time, Hyundai Motor America was favoring an area near Montgomery as the site of its new plant. Hyundai would produce the Sonata, and the automaker would need halfshafts.

The two parties signed the deal, and Alabama paid $10.8 million over a specified time period. The contract called for the state to pay another $4.25 million by March 31, 2005, provided Delphi created more jobs.

Less than four months later, in January 2003, Delphi placed the Limestone facility in its Automotive Holdings Group, a group for underperforming businesses. Delphi sells or closes businesses in this group unless they improve. Officials said the site was losing money and they had to take steps to correct this.

In August 2004, Delphi initiated a policy called "flowback" at the Limestone facility. Two years after accepting $10.8 million from Alabama to increase employee numbers, Delphi began paying workers $67,000 to leave. They were paid to accept positions at General Motors plants across the country, a move the company said was necessary if it was to continue in Limestone County.

At this point, the facility had 2,200 employees, 600 fewer than the target created by the deal with the state.

Negotiating with Alabama

Jackson and state officials confirmed last week that Alabama has not paid the final $4.25 million. Jackson said Delphi asked to renegotiate, and he said the parties reached an agreement recently, but they have not finalized the paperwork.

Jackson would not comment on the negotiations or the outcome. He said Delphi is not ready to release details.

Delphi finished 2004 with sagging earnings, an accounting scandal, plummeting stock and a sliced credit rating. As of May 3, analysts listed Delphi among their lowest rated stocks.

On Wednesday, financier Kirk Kerkorian's Tracinda Corp. announced plans to purchase 28 million shares of General Motor's stock for $31 each. As a result, Delphi's stock jumped 13 percent, or 43 cents, to close at $3.85.

But on Thursday, Standard & Poor's downgraded GM's bond rating to below investment grade, or "junk" status.

DAILY Staff Writers Holly Hollman and M.J. Ellington contributed to this article.

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