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Delphi posts $788 million quarterly loss

/ Source: The Associated Press

Auto parts supplier Delphi Corp., which filed for bankruptcy protection last month, said Wednesday that its losses widened to $788 million in the third quarter due to the high cost of labor and materials and production cuts at its former parent, General Motors Corp.

The loss amounted to $1.40 per share. That compares to a loss of $119 million, or 21 cents a share, in the third quarter of 2004.

Revenues for the quarter were $6.28 billion, down from $6.64 billion the year before. Delphi, which was spun off from GM in 1999, said its non-GM revenues rose 6 percent to $3.33 billion, or 53 percent of its revenues.

Troy-based Delphi is the largest U.S. auto supplier. Delphi said it’s being squeezed by production cuts at GM, which also has been struggling with high labor costs and competition from foreign automakers. GM has cut production by more than 25 percent this year.

Delphi said some of the loss was due to shorter payment terms to its suppliers, who were wary about Delphi’s future in the months leading up to its Oct. 8 bankruptcy filing.

The company also blamed the loss on accrued contract costs for idled employees who had previously been expected to return to work at Delphi or GM plants. Those costs totaled $136 million for the quarter. Delphi said an additional $85 million was incurred for idled employees in the third quarter.

Delphi currently pays full salary and benefits to 4,000 laid-off workers in a jobs bank. The company wants to eliminate the jobs bank as part of its restructuring.

“The sizable loss in this quarter only underscores the urgent need to address our U.S. labor cost issues,” Delphi Chairman and CEO Robert S. “Steve” Miller said.

Miller said Delphi can’t continue to operate its U.S. plants without significant changes. The company has asked the United Auto Workers and other unions to accept pay cuts of up to 60 percent and also wants the right to sell, consolidate or close U.S. plants.

Unions have responded angrily. This week, six unions that represent 33,650 hourly workers said they were banding together to fight Delphi’s wage and benefit proposals.

“We are outraged by Delphi’s attempt to use the bankruptcy process to dictate the radical destruction of the living standards of America’s industrial workers,” the unions said in a joint statement.

Delphi didn’t hold its usual teleconference for investors and analysts Wednesday. The company’s shares are no longer trading on the New York Stock Exchange.