Delphi ( DPH), the largest auto-parts supplier in the U.S., on Saturday filed for bankruptcy for itself and 38 U.S. units, a
widely speculated move that rattled an industry beset by high labor costs and decreasing market share. According to The Associated Press, Delphi filed to reorganize its U.S. operations in federal bankruptcy court in New York, where hearings are scheduled to begin next week. Delphi's non-U.S. subsidiaries are not included in the U.S. filing and are not subject to court supervision or the Chapter 11 process, the company said on its Web site. The Troy, Mich. company has struggled since General Motors ( GM), spun it off in 1999. In 2004, the company lost $4.87 billion, and $747 million in the first half of 2005. Delphi has said publicly that it would file for bankruptcy unless it received bailout funding from GM and labor concessions from the United Auto Workers union. The company set a deadline of Oct. 17, when U.S. bankruptcy laws are scheduled to stiffen, for negotiations to make progress. Delphi CEO Robert Miller said the company hopes to emerge from Chapter 11 in early to mid-2007. "We will make every effort to make this as quick as possible," he told the A.P. The car-components maker employed roughly about 185,200 people worldwide at the end of 2004, including 147,900 hourly workers. About 75% of hourly workers were represented by the union, including 25,200 by the UAW in the U.S., according to the report. Recent reports from UAW local units saying that Delphi proposed to cut wages by more than half to $10 or $12 per hour were "directionally correct," Miller said. The CEO said that nothing would change immediately. "Our global operations, both U.S. and non-U.S., will continue without interruption," He added that Delphi would continue to pay its 50,000 U.S. employees and suppliers and would also ship its products on time.
Delphi's bankruptcy is among the largest in U.S. history; WorldCom, with $103.9 billion in prebankruptcy assets, is the leader. Shares of the company closed Friday's regular session down 50% to $1.12.