Delphi chooses restructuring over bankruptcy
Auto parts maker Delphi Corp. is in talks with unions and its biggest customer and former parent company General Motors Corp. about restructuring US operations to avoid bankruptcy. Delphi, the worlds largest auto parts maker, will draw upon its $1.8 billion credit line to finance its operations. Rumors of bankruptcy talks have been swirling about for months, ever since the GM CEO Rick Wagoner met with Merrill Lynch to say that Delphi was in big trouble. The Troy, Michigan-based supplier had a first quarter loss of $409 million, or $0.74 a share, down from earnings of $53 million, or $0.09 a share a year earlier. This loss stems from high labor and raw material costs combined with GMs production cutbacks. GM cut production by eleven percent between January and June and plans another nine percent cut in the third quarter. Delphi president and chief operating officer Rodney O'Neal said in early August, The storm clouds we're seeing today are not going away, and we'll just have to get used to the weather.