AFSCME 3357-HOF'S BLOG

Delphi's Losses Balloon in April
Red Ink is $181 Million for the Month

Embattled and bankrupt Delphi Corporation announced a $181 million loss for the month of April. This is up from a $93 million loss in March. If the increased losses aren't bad enough, Delphi has worse news when it comes to sales. Sales to GM, it's #1 customer fell from $1 billion to $761 million. Though GM sales are also down overall, the magnitude of the Delphi business loss seems to indicate that GM is well into a plan to reduce its reliance on Delphi by finding outside suppliers. Other customers may be diversifying as well. Sales to non-GM automakers went down from $644 million in March to $548 in April. Clearly uncertainty relating to Delphi's labor contracts has the potential for turning into a death spiral even if the parties keep putting off judgment day for resolution.

Sales to Non-GM automakers went down from $644 million in March to $548 in April. It doesn't look like non-US operations will be Delphi's salvation. The foreign operations have been, and still are, profitable. Moreover, the foreign operations aren't technically involved in the bankruptcy. That being said, profits from foreign operations went down from $70 million to $22 million.

Note these figures are now a month old. If the losses continue to increase at the same rate, any labor deal that Delphi can negotiate with GM and with the UAW is liable to be obsolete before it can be put into practice. Already it may be to the point where a reorganization of Delphi (at least as a single going concern) may be impractical. If I were a creditor, I would think about proposing a competing plan for piecemeal sale of the operating facilities. This may be in General Motor's best interest because GM (with the help of venture firms) could bid on facilities that are key, and ignore facilities that are not essential.

Delphi's April Red Ink Shower