Not least due to the reverberations expected across the industry, the insolvency proceedings of US automotive supplier Delphi (Troy, Michigan; www.delphiautomotive.com) and 38 US subsidiaries are being described as among the most spectacular in US history, certainly in the automotive industry. Delphi´s problems make the recent Chapter 11 filing of Collins & Aikman (Troy, Michigan; www.colaik.com) pale by comparision, US market watchers say.

The guessing game as to whether GM would step in to rescue its 1999 spin-off was answered on 8 October with “no,” as Delphi followed C&A into Chapter 11. The powerful UAW auto workers´ union also declined to make concessions. With new orders dwindling, GM – now fighting not to have to cover health and pension benefits for Delphi employees – is having enough trouble of its own. The carmaker´s share plunged 5% on the news.

As yet, Delphi´s European operations are not affected. On the whole, the company said it will be “business as usual” while it seeks to restructure, backed by a USD 4.5 bn infusion from a banking consortium led by JP Morgan Chase and Citigroup Global Markets. Delphi has assured GM it will continue to supply parts, although outages are feared if the unions balk at planned cutbacks. About half the supplier´s business is believed to be with its former owner.

Faced with cumulative losses of USD 5.5 bn over six quarters, compared with sales of almost USD 30 bn, Delphi CEO Steve Miller is now calculating how many plants will have to close and how many of the company´s 50,000 US workers will be laid off up to mid-2007 as the company tries to slash labour costs. “If we get this right,” Miller told the US magazine Business Week, “Delphi will remain one of the world´s leading global automotive suppliers.” If it turns out badly, the company may be “broken up into small pieces.” A collapse of Delphi could potentially injure most of the world´s auto makers and perhaps fatally wound GM, he said.