Delphi’s carefully coordinated effort to retain and reassure European customers continued after its North American unit filed for bankruptcy, according to Automotive News Europe (ANE).
Volker Barth, head of European operations for the world’s No. 2 auto supplier, echoed the message CEO Steve Miller personally delivered at last month’s IAA: European Delphi customers will be unaffected.
“We’ve made a concerted effort to communicate (with our customers). We don’t want any supplier or customer to suffer, and we’ve provided all the transparency required under Chapter 11,” Barth told ANE at last week’s Equip’Auto suppliers’ show in Paris.
In September in Frankfurt, Miller, a renowned turnaround expert newly hired as Delphi CEO, made a point of meeting all major European customers to reassure them that Delphi would continue to deliver parts on time. Miller explained in detail how Delphi would deal with the customer and how Chapter 11 of US bankruptcy law worked. At the time, Delphi was trying to avoid filing for bankruptcy, but Miller’s message was that whether it did or didn’t, European customers would be safe.
Now that it has filed on October 8, Delphi’s message is the same: its US operations are “not going out of business” and non-US subsidiaries are “entirely unaffected.” The court-supervised Chapter 11 process is intended to protect troubled companies from creditors and let them reorganise their operations on a more viable basis. Delphi can renegotiate labour contracts and dispose of unprofitable plants.
In North America, Delphi has been hampered by the high labour costs and restrictive contracts it inherited from General Motors when the automaker created Delphi out of its components-making divisions in 1999. With GM still its primary customer in North America, Delphi has been hurt by GM’s declining volume.
Delphi is Europe’s No. 11 automotive supplier with 2004 revenues of $5.1 billion, according to Automotive News Europe’s rankings. Its European operations are profitable with a diversified customer base and labour rates that are comparable with competitors.