USA: Delphi investigating how newspaper obtained restructuring document

By just-auto.com editorial team | 3 November 2005

Components maker Delphi - currently operating under Chapter 11 bankruptcy protection - is reported to be investigating how The Detroit News obtained a document about its restructuring plans and will consider taking legal action.

"We consider this a very serious breach, and we're conducting an internal investigation," Delphi spokeswoman Claudia Baucus told The Associated Press (AP), adding: "Legal action - including referral to law enforcement authorities - will be considered based on the findings of our internal review."

The document, which, according to AP, was obtained by The Detroit News, reportedly said Delphi is considering a plan to get rid of seven plants and seven technical centres as part of an overhaul of its electronics and safety unit.

Baucus told AP the News isn't the subject of the investigation but wouldn't comment on the details of the document.

"Delphi is aware that a confidential draft document was distributed publicly without authorisation," she said. "Because it's a draft, the information is incomplete and does not necessarily reflect current plans."

According to The Associated Press, the document says the plants targeted for phase-out are located in Flint [Michigan]; Kokomo, Indiana; Milwaukee, Wisconsin; Vandalia, Ohio; Tucson, Arizona; Ashimori, Japan; and Liverpool in England.

AP noted that about 3,400 people work at the Flint East plant and that Delphi stopped production at another facility in Flint last year.

Flint was hard-hit in the 1980s by the closure of a huge vehicle manufacturing complex owned by General Motors, Delphi's former parent company. That closure became the subject of a 1989 documentary film called 'Roger and Me' - the title refers to GM's then-CEO Roger Smith - made by Michael Moore, who later produced the anti Iraq war documentary 'Fahrenheit 911'.

The Associated Press said the leaked Delphi plan calls for reducing the number of technical centres to 16 by eliminating two in Germany and one each in Flint; Westfield, Indiana; England; Luxembourg; and Sweden.

The plan reportedly lists "product line potential exits" for ignition systems, air meters, antilock brakes, steering controllers, suspension components and instrumentation products.

AP added that the plan calls for Delphi to seek global dominance of automotive electronics and safety markets and to pursue "aggressive cost reduction via product exits, site consolidation, and legacy labour cost reduction." It also says Delphi will seek to "execute ruthless portfolio management" by focusing on "more winners, more exits."

The news agency noted that the electronics & safety unit accounts for US$5.8 billion of Delphi's annual sales of about $28 billion and that the document lists Motorola Inc.'s automotive division as a target for acquisition.

According to The Associated Press, a 15 September Wall Street Journal report said mobile phone maker Motorola had hired JP Morgan Chase & Co. to pursue the possible sale of the 5,000-employee automotive products unit. Motorola reportedly declined to comment at the time and also declined to comment [to AP] on any talks with Delphi.