Delphi Says They Can't Extend GM Deal
May 1, 2006
There seems to be more trouble brewing between Delphi and General Motors. Delphi is a major supplier to General Motors, and also is a distributor of XM Satellite Radio receivers. The Delphi issues play a minor roll in XM's aftermarket products. XM also carries products from other distributors and suppliers. The real issue may well revolve on
Delphis's impact on GM, and by extension onto XM because of GM possible impacts to auto production.
VIA Rueters
May 1, 2006 — CHICAGO (Reuters) -
Bankrupt auto parts maker Delphi Corp.
on Monday said it could not reach a deal with General Motors Corp. to extend an agreement under which the U.S. automaker would pay higher prices for Delphi parts.
Delphi, which filed for bankruptcy court protection for its North American operations last October and is seeking to void its union contracts, said on March 31 that it would seek to end or renegotiate the unprofitable GM supply contracts.
Delphi, which was spun off from GM in 1999, said its net sales will begin to reflect the contractual price reductions it must provide GM as of April 1.
GM had foregone price reductions previously agreed to by Delphi through the first quarter, but Delphi said that as of April 26 the companies could not agree on terms to extend that agreement.
In March, Delphi filed a motion in a U.S. Bankruptcy Court in New York to void its U.S. labor contracts with the United Auto Workers and the International Union of Electrical Workers-Communications Workers of America, cut up to 8,500 salaried workers and close or sell a third of its plants globally in its attempt to slash costs and restructure its operations.
Delphi has said such moves are key to its plans to emerge from Chapter 11 bankruptcy protection in the first half of 2007. The unions have objected to such moves and have threatened to strike Delphi if contracts are tossed out.
A strike could quickly shutter Delphi and cripple production within days at GM.
Delphi's reply to the union objections to the contracts rejection motion are due on Monday.
Delphi said Monday that it continues talks with its U.S. unions and GM toward a deal to reduce its labor costs, and that GM financial support will be part of any overall agreement.
Separately, Delphi said in a regulatory filing it was amending financial results for the year 2000 to correct an accounting error.
The change reduces Delphi's previously-reported net income by $69 million, but results in no change in total stockholders' equity, Delphi said.
The link to this write up is http://tinyurl.com/nsowv5/01/2006 02:33:00 PM
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