GM purchasing chief says GM shifting Delphi work to other suppliers

[Ming]

GM official says GM shifting Delphi work to other suppliers
By Terry Kosdrosky
Last Update: 4:50 PM ET Apr 11, 2006



TROY, Mich. (MarketWatch) -- General Motors Corp.'s (GM) purchasing chief said Tuesday that the auto maker already is shifting work from top supplier Delphi Corp. (DPHIQ) to other suppliers in preparation for Delphi's planned exit from certain business lines.

The shift eases GM's heavy Delphi dependence and presents opportunity for suppliers interested in picking up high-volume business Delphi plans to drop. GM recently sent spark-plug and air-induction work to other suppliers and is talking actively to companies to see it they're interested in picking up more Delphi work, said Bo Andersson, GM's vice president of global purchasing.
Andersson addressed nearly 600 suppliers at a town hall meeting here organized by the Original Equipment Suppliers Association and spoke to reporters after the meeting.

"Can you take the rest of the business up? That's the way we are approaching it," Andersson said during the press conference.
Delphi, as part of its reorganization announced March 31, said it planned to close the vast majority of its North American plants and exit certain business lines, such as brakes and spark plugs, where it said it couldn't compete. Delphi put its U.S. operations into Chapter 11 bankruptcy in October. The supplier spun off from GM in 1999.

GM, which buys about $85 billion a year in parts and materials, including $61 billion a year in North America, is responding to Delphi's plans. About three weeks ago, before Delphi even announced the reorganization, Japan's Denso Corp. (6902.TO) and NGK Spark Plug Co. (5334.TO), as well as Honeywell International Inc. (HON) and Germany's Beru AG (BZL.XE), picked up spark-plug business formerly provided by Delphi, according to Andersson and a GM spokesman. Air-induction contracts were awarded to Siemens AG (SI) unit Siemens VDO Automotive Corp., and the transition is ongoing, Andersson said.

Andersson said he has engaged GM's "best-performing" suppliers to ask if they are interested in picking up more Delphi work. He said companies that do pick up Delphi work could get longer-term contracts, and that any interest suppliers should contact him.

"The biggest value of Delphi is its contracts," as the company is a high-volume supplier, Andersson told reporters.

Andersson wouldn't discuss GM's negotiations with Delphi over the supplier's motion to reject what it says are unprofitable contracts with GM. In court papers, Delphi called some of the contract prices onerous. Andersson said that's part of GM's negotiations with Delphi and the United Auto Workers union.

He did echo comments made by Chief Executive Rick Wagoner this weekend, who said that while GM is stockpiling parts to guard against a possible strike at Delphi, he doesn't believe that stockpiling is a solution to the problem. Delphi has filed motions seeking to cancel its union contracts. If that's approved - and the process could take at least until mid-June - Delphi's unions have said they would strike.

"We are putting all of our energy into negotiating," a deal with Delphi and the UAW, Andersson said.

Despite turmoil in the supply chain, including multiple bankruptcies and the recent Chapter 11 filing from Dana Corp. (DCNAQ), Andersson said he doesn't expect more high-profile bankruptcies this year. He also said he isn't concerned about GM's purchasing bill rising because of bankruptcies.
Suppliers in Chapter 11 sometimes ask for higher prices since the law gives them the chance to reject unprofitable contracts. While that could lead to a short-term price increase, companies coming out of Chapter 11 shed debt and legacy costs and are able to offer competitive prices.

Speaking to the supplier group, Andersson said the issue of raw material prices will continue to be difficult. While GM has worked with its suppliers on rising steel prices and sets quarterly adjustments for aluminum, prices for plastic resins is a more difficult issue. Resin prices have spiked because the cost is pegged to the price of oil.

"That's not so easy," Andersson said, though he added that GM is working with select suppliers to come up with a more "balanced" model.
Suppliers have criticized GM and other auto makers for not accepting price increases for plastic resin. The suppliers have to pay for such increases charged by their vendors.

Overall, Andersson said GM is working with suppliers to try to find the right balance between a supplier's need for financial health and GM's need to cut costs to compete in a competitive market.

Source: http://www.marketwatch.com/News/Stor...oogle&keyword=

[GMFreak8]

It's truly sad that in order to compete now, these companies can't build manufacturing facilities in the U.S.

“The world power that loses its manufacturing capacity will cease to be a world power.” - Akio Morita, founder of Sony Corporation

[rueben44]

True ans we are on the path down and fast.

1)Substandard education
2) Illegal Workers lowering paying scales and keeping heath care reform from progressing
3)Decreasing middle class and their jobs being moved to other countries because of health cost and other stuff.
4) We are so focused on Jessica Simpson that we can not see the current down fall of our nation. Everyone else milks us and we invest nothing in our own.

[bryce miller]

well i guess its good atleast somebodies getting work

[mbukukanyau]

I own some delphi Shares

[Mikkoo]

Originally Posted by mbukukanyau

I own some delphi Shares

You poor soul. Bet you've lost a lot of money.

[drew770]

Well, I hate to see GM get supplies from foreign companies but at least they don't have all of their eggs in one basket.
None of us really knows how this Delphi/UAW strike talks will turn out so GM is smart to start finding other suppliers!

[TaHoE]

Originally Posted by drew770

Well, I hate to see GM get supplies from foreign companies but at least they don't have all of their eggs in one basket.
None of us really knows how this Delphi/UAW strike talks will turn out so GM is smart to start finding other suppliers!

I agree. It's better that gets parts from several suppliers right now, Delphi is too unstable.

[WishIhadatruck]

Originally Posted by mbukukanyau

I own some delphi Shares

I used to be employed by GM and then Delphi. I used to own quite a few shares and dumped them all when it when up to around $17 back in 2002. Glad I left and glad I sold. I feel bad for all my former coworkers however. I don't believe that plant will survive.

[joey]

I think I hear more factories humming in China and India.

[69Firebird400]

Isn't this a little late in the game for GM to be diverting some of their supply contracts away from Delphi? The strike is probably going to be a month away. It's great that they can get spark plugs and commodity parts from other suppliers, but what about the rest of the bulk of components that they still get from Delphi? I'm sure in no small part that means vehicle electronic systems. Having the benefit of hindsight, it was kind of foolish for GM to count on one supplier to make a majority of their components rather than spreading the contracts around a little better. Hopefully there is a lesson to be learned from this situation to avoid a repeat down the road.

[tom3]

As long as we keep printing the world's money, and they keep accepting it, I guess we can exist by mowing each other's lawns. Hopefully the collapse is some years away.

[303montecarlo]

Originally Posted by Ming

GM official says GM shifting Delphi work to other suppliers
By Terry Kosdrosky
Last Update: 4:50 PM ET Apr 11, 2006



TROY, Mich. (MarketWatch) -- General Motors Corp.'s (GM) purchasing chief said Tuesday that the auto maker already is shifting work from top supplier Delphi Corp. (DPHIQ) to other suppliers in preparation for Delphi's planned exit from certain business lines.

The shift eases GM's heavy Delphi dependence and presents opportunity for suppliers interested in picking up high-volume business Delphi plans to drop. GM recently sent spark-plug and air-induction work to other suppliers and is talking actively to companies to see it they're interested in picking up more Delphi work, said Bo Andersson, GM's vice president of global purchasing.
Andersson addressed nearly 600 suppliers at a town hall meeting here organized by the Original Equipment Suppliers Association and spoke to reporters after the meeting.

"Can you take the rest of the business up? That's the way we are approaching it," Andersson said during the press conference.
Delphi, as part of its reorganization announced March 31, said it planned to close the vast majority of its North American plants and exit certain business lines, such as brakes and spark plugs, where it said it couldn't compete. Delphi put its U.S. operations into Chapter 11 bankruptcy in October. The supplier spun off from GM in 1999.

GM, which buys about $85 billion a year in parts and materials, including $61 billion a year in North America, is responding to Delphi's plans. About three weeks ago, before Delphi even announced the reorganization, Japan's Denso Corp. (6902.TO) and NGK Spark Plug Co. (5334.TO), as well as Honeywell International Inc. (HON) and Germany's Beru AG (BZL.XE), picked up spark-plug business formerly provided by Delphi, according to Andersson and a GM spokesman. Air-induction contracts were awarded to Siemens AG (SI) unit Siemens VDO Automotive Corp., and the transition is ongoing, Andersson said.

Andersson said he has engaged GM's "best-performing" suppliers to ask if they are interested in picking up more Delphi work. He said companies that do pick up Delphi work could get longer-term contracts, and that any interest suppliers should contact him.

"The biggest value of Delphi is its contracts," as the company is a high-volume supplier, Andersson told reporters.

Andersson wouldn't discuss GM's negotiations with Delphi over the supplier's motion to reject what it says are unprofitable contracts with GM. In court papers, Delphi called some of the contract prices onerous. Andersson said that's part of GM's negotiations with Delphi and the United Auto Workers union.

He did echo comments made by Chief Executive Rick Wagoner this weekend, who said that while GM is stockpiling parts to guard against a possible strike at Delphi, he doesn't believe that stockpiling is a solution to the problem. Delphi has filed motions seeking to cancel its union contracts. If that's approved - and the process could take at least until mid-June - Delphi's unions have said they would strike.

"We are putting all of our energy into negotiating," a deal with Delphi and the UAW, Andersson said.

Despite turmoil in the supply chain, including multiple bankruptcies and the recent Chapter 11 filing from Dana Corp. (DCNAQ), Andersson said he doesn't expect more high-profile bankruptcies this year. He also said he isn't concerned about GM's purchasing bill rising because of bankruptcies.
Suppliers in Chapter 11 sometimes ask for higher prices since the law gives them the chance to reject unprofitable contracts. While that could lead to a short-term price increase, companies coming out of Chapter 11 shed debt and legacy costs and are able to offer competitive prices.

Speaking to the supplier group, Andersson said the issue of raw material prices will continue to be difficult. While GM has worked with its suppliers on rising steel prices and sets quarterly adjustments for aluminum, prices for plastic resins is a more difficult issue. Resin prices have spiked because the cost is pegged to the price of oil.

"That's not so easy," Andersson said, though he added that GM is working with select suppliers to come up with a more "balanced" model.
Suppliers have criticized GM and other auto makers for not accepting price increases for plastic resin. The suppliers have to pay for such increases charged by their vendors.

Overall, Andersson said GM is working with suppliers to try to find the right balance between a supplier's need for financial health and GM's need to cut costs to compete in a competitive market.

Source: http://www.marketwatch.com/News/Stor...oogle&keyword=

This is another farce Perigrin,Ac systems and Delphi .This is not hard to understand if GM keeps this going ,it will go the same way. GM needs to reinvest in its own Manufacturing in house, to stop this blood bath of flyby night companies that are working for their interests.This would be a good time to give the People involved with the thinking a million to retire,and get back to work on building quality parts.Then you will have quality cars.Then get rid of the empty building above .
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[303montecarlo]

Originally Posted by 69Firebird400

Isn't this a little late in the game for GM to be diverting some of their supply contracts away from Delphi? The strike is probably going to be a month away. It's great that they can get spark plugs and commodity parts from other suppliers, but what about the rest of the bulk of components that they still get from Delphi? I'm sure in no small part that means vehicle electronic systems. Having the benefit of hindsight, it was kind of foolish for GM to count on one supplier to make a majority of their components rather than spreading the contracts around a little better. Hopefully there is a lesson to be learned from this situation to avoid a repeat down the road.

GM has only to take the Delphi name of the old GM plant and put another name on it,it is that easy.

[01cavalier]

I'd say it's good that GM is changing suppliers from Delphi, if the situation seriously gets bad, they at least won't be as crippled by it. I would not be surprised if they have started this before the bankruptcy.