Delphi Automotive Systems plans to entertain offers to sell 13 of its plants, including two large injection molding facilities that form the company's lighting business.
Delphi's lighting plants, located in Anderson, Ind., and Monroe, La., make molded plastic headlamps, taillamps and turn-signal lenses for General Motors Corp. vehicles. Also included in the potential sale is an engineering center in Anderson.
Delphi's lighting group records annual sales estimated at $325.5 million, said consultant Craig Cather of CSM Corp. in Okemos, Mich. The lighting market is about a $1.3 billion industry in North America, he added.
Delphi, based in Troy, Mich., said Sept. 18 that it would explore proposals from outside buyers interested in three of its divisions. The stand-alone parts making unit of GM wants to shed operations that fall below stated profit levels and focus on those areas that offer Delphi a leadership position, said spokeswoman Karen Hulsey of Delphi's Interior & Lighting Systems group in Warren, Mich.
The company will focus on other growth businesses, such as integrated interior cockpit assemblies, air bag systems and door modules. Delphi officials said the plants for sale did not meet the supplier's stated goal of 5 percent margin on net profit.
Besides the lighting operations, plants on the sales block include nine seating facilities in North America, Europe and South Africa and two coil springs plants that are part of Delphi's chassis systems group.
Industry sources said several Tier 1 suppliers are in discussions with Delphi to purchase the seating operation. Possible bidders could include Markham, Ontario-based Magna International Inc., Southfield, Mich.-based Lear Corp. and Plymouth, Mich.-based Johnson Controls Inc.
One source, who requested anonymity, said Magna was the likely candidate to buy the seat plants. ``The seating business is pretty much a done deal,'' the source said. ``Magna has got it.''
The seating business, which employs 7,000, involves seat frame production, assembly operations and cut-and-sew facilities. Delphi outsources much of its plastic injection molded seating parts to outside suppliers, Hulsey said.
Delphi's lighting systems group employs about 4,000 and injection molds exterior lenses typically made from polycarbonate materials. Equipment totals at the plants were not disclosed.
The sprawling, 2.5 million-square-foot Anderson facility is the most troublesome. The plant, which makes taillamps and turn signals for about 75 percent of GM's North American vehicles, has faced a series of strikes in recent years.
In addition, a three-year contract finalized in September 1996 with Local 663 of the United Auto Workers contained a no-sale, no-close clause, said Local Vice President David Petry in Anderson.
``We are stunned and shocked,'' said Petry, who added that the plant's 2,600 hourly employees were told the news in a joint meeting Sept. 18. ``It is our belief that [Delphi] should live up to their part of the agreement. We're waiting for the international union to tell us what our options are.''
Delphi officials said the contract contained a clause that said the Anderson plant would not be sold only if it met certain productivity conditions, which it did not reach. Delphi had previously reported that the plant has lost at least $172 million since 1992.
The Monroe plant, estimated at about 413,000 square feet, supplies headlamps to more than 95 percent of GM's North American vehicles. The plant has been profitable, according to Petry. Union officials in Monroe were unavailable. The plant has about 1,050 employees.
Potential buyers for the lighting plants could include some of the larger Tier 1 lighting suppliers to the Big Three, Cather said.
They include Osram Sylvania Inc. of Danvers, Mass., which recently formed a joint headlamp-producing venture with Paris-based Valeo SA; Textron Automotive Co. of Troy, Mich., which primarily supplies lighting systems for Chrysler Corp. vehicles; Cleveland-based GE Lighting; and Keeler Brass automotive division in Kentwood, Mich.