GM Can't Feed Its Child

Bertel Schmitt
by Bertel Schmitt
gm can t feed its child

Bankrupt United States car parts maker Delphi has decided to temporarily close a plant in China’s Suzhou, the Hong Kong’s South China Morning Post (sub) reports. The factory west of Shanghai makes compressors for General Motors Corp. Delphi had been spun off from GM, as Visteon was from Ford, and Denso from Toyota. All with the (at least official) idea to supply other automakers of the world as well.

Unfortunately, it didn’t work out that way for the Suzhou plant: “The sudden and unprecedented decline in car sales globally has resulted in our only customer, General Motors North America, announcing plant closures and plant stoppages,” the South China Morning Post quoted from a statement by Delphi. “Unfortunately our only customer in 2009 is GMNA, and this has placed the Suzhou compressor plant in a very dangerous position,” the document continues.

Delphi was set up as an independent company by GM in 1999. Delphi filed for Chapter 11 bankruptcy protection in 2005. 24 of its 29 plants in the U.S. closed down. A lot of their manufacturing moved to China. Delphi (through its parent GM) was one of the early entries into China, and had invested into factories since 1991. According to Reuters, Delphi had announced the opening of a new plant in Souzhou city in October 2007. The plant was to produce 550,000 compact variable compressors per year. Reuters said at the time that Delphi had “invested more than $500 million in China, where it currently has nine joint ventures and four wholly owned factories.”

Join the conversation
  • Jerry weber Jerry weber on Dec 30, 2008

    We all know that Delphi and Visteon were built on a bed of sand. First, these money losing: plants, union contracts, prices for parts, etc, were simply taken off the GM & Ford balance sheet and tossed overboard to a new company with no chance of profitability. Then to add insult to injury, the price the big two were willing to pay these spinoff's parts was tightened to attempt making a profit at GM & Ford on the money losing cars these parts went into. On a column way back, I said where will Delphi & Visteon get the ability to sell the parts for less? The answer was obvious, make the parts cheaper. Now you have to say, do I want to buy a car made from cheap parts? This being especially true if a car is the sum of it's parts. We now have that answer of parts from bankrupt entities be they made in the US or China.

  • Usta Bee Usta Bee on Dec 30, 2008

    Here's a story on your Hungry Man Breakfast From Hell, read the nutritional label info it's the best part:

  • Nick Nick on Dec 30, 2008

    Usta Bee, thanks for that link...though stomach churning, it was very funny. Back to Delphi...I wonder if they are sufficiently removed from GM that they can apply for their own bailout. Come to think of it, who can't apply for a bailout?