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Delphi to Trim 11,500 Jobs

Auto parts: It also plans closures, cuts at nine plants under a massive restructuring.

March 30, 2001|From Associated Press

DETROIT — Delphi Automotive Systems Corp., the world's largest auto parts supplier, said Thursday it will cut 11,500 jobs under a massive restructuring plan prompted by a soft U.S. auto market that will leave its first-quarter earnings short of Wall Street forecasts.

While jettisoning 5% of its global work force, Delphi said it plans to sell, close or consolidate nine plants and cut staffing at more than 40 other sites as it exits what the company called "the weakest portion" of its businesses.

The planned job cuts affect 5,600 of Delphi's U.S. hourly workers, though the company said perhaps more than twice that number already are retirement-eligible. Delphi, which was spun off by General Motors Corp. in 1999, also will eliminate 2,000 white-collar workers nationwide and 3,900 more jobs outside the United States.

Delphi, based in the Detroit suburb of Troy, Mich., expects to eliminate the jobs through early retirements, layoffs and attrition.

"Every week of this quarter we have made reductions to output in an effort to match customer order flow" but have found such cutbacks not enough to stave off the planned restructuring, Chief Financial Officer Alan Dawes said.

Delphi plans to take a first-quarter charge of $400 million for the restructuring, which it expects to complete within a year.

Excluding the charge, Delphi may break even in the first quarter or post a loss of as much as 9 cents, Dawes said. Analysts were expecting a 17-cent profit, according to First Call/Thomson Financial.

Delphi predicted revenue of $6.4 billion to $6.5 billion for the quarter, down $100 million to $150 million from what had been forecast in January. In the year-earlier quarter, the company earned 57 cents a share on revenue of $7.8 billion.

Also Thursday, auto parts maker Federal-Mogul Corp. warned it expects a first-quarter operating loss of about 65 cents a share, much larger than the 37 cents analysts predicted.

The Southfield, Mich.-based company expects revenue to fall nearly 13% to $1.4 billion. Last month, Federal-Mogul said it would cut 1,210 salaried workers--or 8.6% of its global white-collar ranks.

Delphi shares rose 58 cents to close at $14.52; Federal Mogul was off a penny at $3.20, both on the New York Stock Exchange.

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