From Detroit Free Press

Robert Bosch GmbH, the world's largest auto parts supplier, said Tuesday it is looking to acquire other auto suppliers, including Delphi Corp., to grow its business. The troubled Troy, MI-based parts supplier has been losing $120 million to $1 billion a month since filing for bankruptcy in October.

Germany-based Bosch CEO Franz Fehrenbach said Tuesday at the Geneva Motor Show in Switzerland that Bosch might consider purchasing parts of Delphi.

"Bosch certainly has its antennae out and is considering all acquisition opportunities that complement and help strengthen the business," Bosch spokeswoman Chandra Lewis said.

For the month ending Jan. 31, Delphi lost $121 million and had net sales of $835 million, the company announced Tuesday. From Oct. 8, when Delphi filed for bankruptcy, to Jan. 31, Delphi has lost $1.4 billion on total sales of $3.3 billion.

Delphi is required to submit a monthly operating statement while in bankruptcy, but Delphi spokeswoman Claudia Piccinin said the company would not give explanations of its finances as it would during quarterly financial releases. Piccinin did say that the losses support Delphi CEO Steve Miller's reasons for filing for bankruptcy.

"Certainly, the numbers show that our U.S. operations are not profitable at current volume levels and, given our contractual expenses, we are not profitable in our current state," Piccinin said.

Delphi once was General Motors Corp.'s parts-making subsidiary and spun off as an independent company in 1999. But it never has been consistently profitable. It lost $4.8 billion in 2004. After losing another $741 million in the first six months of 2005, it filed for Chapter 11 bankruptcy protection.

The parts maker says it is burdened with restrictive labor contracts that require it to pay workers far more than its competitors do. The company says its 34,000 hourly workers in the United States make $27 an hour -- $76 an hour when benefits are added. It wants to cut 24,000 hourly jobs from the U.S. workforce and reduce the wages to an average $12.50 an hour, or $35 an hour when benefits are added.

Delphi has threatened to cancel labor contracts if blue-collar workers don't accept significant reductions in jobs, pay and benefits. The six unions representing the workers have banded together in a coalition led by the United Auto Workers and have threatened to strike if contracts are nullified. Such a walkout that could quickly shut down most, if not all, GM assembly plants in the United States, Mexico and Canada.

But fearing the threat of a UAW strike at Delphi, GM Chairman and CEO Rick Wagoner agreed to a plan temporarily forgoing price reductions GM demanded on parts it buys from Delphi. Also, GM CFO Fritz Henderson said Jan. 26 that the automaker would spend $3.6 billion to $12 billion in benefit guarantees for some former workers who were moved to Delphi.

Senior credit analyst Brad Rubin of BNP Paribas in New York said a bailout for Delphi would be affordable for GM. Rubin estimates that, out of 24,000 UAW Delphi workers, two-thirds are close to retirement and could be bought out. To pay them off, Rubin estimates, at worst, the cost to be $1 billion to $1.2 billion. For the remaining workers, Rubin estimates it would cost GM about $200 million a year to keep Delphi hourly wages up near $22 an hour -- $5 an hour less than the current average, but perhaps enough to avert a strike.

GM, Delphi and the UAW have been negotiating since Jan. 20, under the belief that avoiding a strike is best for everyone. Miller set a deadline for reaching a deal by March 30.

If a deal is not reached, Miller says, Delphi would file a motion the next day in bankruptcy court seeking permission to cancel union contracts, a move sure to trigger the UAW to take a strike vote.

The longer Delphi stays in bankruptcy, the more it will cost GM, said Erich Merkle, auto analyst with IRN Inc. in Grand Rapids. Merkle said GM will have an increasingly hard time ensuring Delphi's parts are not interrupted, because the likelihood of an interruption increases the longer a company is in bankruptcy.

Another factor putting pressure on a swift deal is UAW Vice President Richard Shoemaker's pending retirement in June at the union's national convention in Las Vegas.

David Cole, director of the Center for Automotive Research in Ann Arbor, MI, said Miller does not want to put the burden of the negotiations on someone who is new to the discussions.

Copyright 2006 Detroit Free Press. All Rights Reserved.

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