Future looks good for Delphi plant, analysts say

PERKINS TWP. Auto industry analysts say the recent contract approval at Delphi Co. means there is st
May 24, 2010



Auto industry analysts say the recent contract approval at Delphi Co. means there is still a future for the local plant, which could be sold.

"It's better than the alternative, which is shutting it down completely," said Ned Hill, vice president of economic development at Cleveland State University.

United Auto Workers voted last week to approve a contract with Delphi that would reduce wages and close some plants, but save jobs for thousands of workers.

An overwhelming number of workers -- 7,613 workers or 68 percent -- voted in favor of the contract and 3,612 workers voted against it.

Under the agreement, the Troy-based auto supplier would keep and operate four UAW plants, which include Kokomo, Ind., Lockport, N.Y., Rochester, N.Y., and Grand Rapids, Mich.

The agreement would also put four plants up for sale including the plant in Perkins Township, which makes wheel spindle bearings, roller clutches for transmissions and water pump assemblies for cars and trucks.

The plant employs more than 1,000 employees including 190 salaried employees and 900 hourly employees represented by UAW Local 913. The other plants slated for sale are the Saginaw Steering plant in Saginaw, Mich., Adrian, Mich., and Cottondale, Ala.

Hill said Monday he believes selling the plant is a viable option.

"The product is competitive under the right operating conditions, otherwise they would just shut it down," he said.

Greg Gardner, an analyst for Troy-based Harbour Consulting in Mich., said there is a good chance the plant will survive under new ownership.

Ratifying the agreement will now move the auto supplier closer to emerging from bankruptcy. In 2005, Delphi Corp. filed for Chapter 11 bankruptcy and officials announced that many plants would be sold or shut down, including the Perkins Township plant.

"I think there's a 95 percent chance they will be able to get out of Chapter 11 now," Gardner said. "Until this agreement, there was always a chance for a strike. Removing that uncertainty is a huge positive."

Plants that would close or consolidate include facilities in Columbus, two in Milwaukee, Wis., Coopersville, Mich., Anderson, Ind., Wichita Falls, Texas, Fitzgerald, Ga., Olathe, Kan., Laurel, Md., and Athens, Ga. Eligible workers at these plants -- excluding Olathe, Laurel and Athens -- would receive a $67,000 relocation allowance after their plants close to move to a General Motors Extended Area Hire plant, according to the parties' agreement.

The UAW represents about 17,000 workers at 17 Delphi facilities across the nation.

Local union and Delphi officials are planning to meet soon to discuss the future of the Perkins Township plant, said Ralph Brumby, president of the UAW Local 913. He declined to offer his opinion on the plant before the meeting.

Company officials directed questions to the contract agreement.