DETROIT — Led by a team of General Motors Corp. veterans, Delphi Automotive Systems is steeped in GM tradition. Although the team members will not change much when GM spins off its parts-making Delphi unit next year, the way they manage the new company will.
Delphi President J.T. Battenberg said the spinoff will give him and his lieutenants a ``clean sheet'' to tackle Delphi's top challenges as they see fit. In the coming years, Delphi's challenges include:
Improving its relationship with the United Auto Workers, which represents 25 percent of Delphi's global work force.
Increasing sales outside the vast GM umbrella.
Maintaining and increasing its current business with GM in North America and globally.
Battenberg and GM Chairman Jack Smith announced Aug. 3 that Delphi in Troy, Mich., will become an independent, publicly traded company in 1999. Battenberg will be chairman, president and chief executive officer of the new entity.
The team is working on how to differentiate Delphi's style from Detroit-based GM's. Battenberg, who has studied AT&T Corp.'s successful spinoff of Lucent Technologies Inc., said he must energize all of his employees and listen to their ideas on how the new company should be put together.
``There are no rules now. We're starting over. There's nobody that's telling us how to have relations with our unions or our people,'' Battenberg said in an Aug. 4 interview.
Battenberg already is talking about growth. Delphi will be able to use its common stock as currency for employee bonuses and to acquire new businesses, he said.
He added that the spinoff will allow him to forge a better relationship with the UAW.
``We're reaching out to the unions, the leadership at the local level and national level, asking for their ideas on what we can do differently,'' Battenberg said.
Despite the recent strike at a Delphi plant in Flint, Mich., and threats of a strike in Dayton, Ohio, Battenberg bristles at the suggestion that Delphi has a bad relationship with the UAW.
Bryan Lillis, president of UAW Local 167 at a Delphi facility in Grand Rapids, Mich., said his dealings with Delphi's management have been positive.
At the same time, Battenberg sometimes makes union members cringe when he pushes for changes at the plants faster than the workers feel is possible, Lillis said.
``Battenberg could turn out to be more aggressive and not as sympathetic to the way the UAW wants it done,'' he said.
At some facilities the union's distrust of Delphi and GM officials is much stronger. Ollie Dixon, president of UAW Local 663 at Delphi's Anderson, Ind., plant, said Battenberg in 1994 personally promised the shop committee he would not sell the plant. Four years later, Delphi is selling the plant because of its poor performance.
Battenberg is just another cookie-cutter GM executive, Dixon said.
Battenberg describes himself as conciliatory by nature and blames some of Delphi's labor problems on the company's openness about plant performance. ``There are no secrets,'' he said. ``That can be painful if you're struggling and not world-class.''
Currently, five of Delphi's 208 plants are labeled as troubled, Battenberg said. That means they have not devised plans to reach a 5 percent margin or a 12.5 percent return on net assets.
If Delphi cannot fix those plants, it will consider selling them or shutting them down.
``It's consistent. It's open and it's honest,'' Battenberg said.
The spinoff also will increase Delphi's ability to win business outside of GM. Currently, about 34 percent of its sales are to customers outside of GM's North America operations; more than half of those are outside GM international operations.
Delphi's goal has been to increase its non-NAO business to 50 percent of sales by 2002. However, other automakers had been reluctant to give Delphi more business — and more information on their future vehicle programs — while Delphi remained part of GM, Battenberg said.
As for its GM business, Battenberg sees opportunities to increase sales to the automaker in China and India. Although the spinoff increases GM's flexibility to choose other suppliers, GM and Delphi are working out a long-term supply contract.